Microsoft Signs Mega-Patent Deal With Samsung, Will Get Royalties on Every Android Device It Sells
Microsoft is announcing today the biggest Android-related patent deal to date, signing a broad cross-licensing deal with Samsung. — With the deal, Microsoft will get royalty revenue …
Context & Ripple Effects
Microsoft has spent 2011 converting its smartphone patent portfolio into a licensing business, and today's position as Android's patent toll collector reaches its logical peak: Samsung is the largest Android handset maker, so a cross-license here puts Microsoft on the royalty ledger for nearly every Android device shipped. The timing is pointed — Samsung confirmed 10 million Galaxy SII units sold into the channel just two days ago, with the US launch still underway.
The framing from Microsoft's own syndicated posts ('how IP drives innovation') signals the company wants this read as partnership, not taxation — but the economics are unambiguous: a rival OS now earns per-unit revenue off Android's success.
First-order effects
- Samsung's Android handsets — including the just-launched Galaxy SII — now carry a Microsoft royalty on every unit sold, raising Samsung's per-device cost against rivals running licensed platforms.
- Microsoft gains a recurring revenue stream tied directly to Android volumes, decoupled from Windows Phone's own market performance.
Second-order effects
- Every other Android OEM now faces a starker choice: sign a comparable license like Samsung did, or risk litigation knowing the category leader chose to pay.
- Google's 'free' Android pitch takes a hit — the platform's total cost of ownership now includes third-party patent royalties, which Google does not collect and cannot waive.
Third-order effects
- If the pattern holds, smartphone competition shifts further from product differentiation to portfolio strength, rewarding companies with large patent estates regardless of their own handset share — and inviting scrutiny of whether such licenses deter OEMs from rival platforms.
The trend: Mobile platform competition is increasingly waged through patent licensing, letting incumbents monetize rivals' hardware success when their own OS cannot.