We knew Microsoft makes most of its mobile operating system money from Android, not Windows Phone, but a billion dollars? From one vendor?! Microsoft's good times, however, are in danger of coming to an end.
That's not a typo. That's a billion dollars.
We've always known that Microsoft makes most of its mobile money from Android. What we didn't know was just how much Microsoft profits from its patent deals from any single vendor. Now we do.
In 2013 alone, Microsoft made a billion dollars from its Samsung Android patent licensing deal alone. In that same year, Microsoft profited from its Android patents to a tune of about $3.4 billion. That's not small change, even for Microsoft.
Microsoft started milking Android product vendors — such as Foxconn, HTC, and ZTE — for patent payments in 2010. Microsoft got Samsung to sign on the dotted patent agreement line in 2011.
Until recently, no one knew though exactly what these companies were paying for. Microsoft refused to reveal what patents Android was violating and insisted, as part of its patent agreements, that no one else could reveal what patent pigs in a poke were actually being licensed.
Only Motorola Mobility has fought Microsoft in court over its Android patent licensing demands. And, Motorola Mobility has shown that Microsoft Android patent portfolio may not be all that rock solid. Of the 17 patents to appear so far before the International Trade Commission, the US District Court of Western Washington, and the German Federal Patent Court, 16 saw Motorola victorious. The only Microsoft-owned Android patent to be upheld to date has been US Patent No. 6,370,566 for ActiveSync.
That's it. That's all.
Now, however, thanks to the Chinese government, we do know about the 310 patents Microsoft has deployed against Android. And, you know what? They're not that good.
M-Cam, a global financial institution that advises corporations and investors on corporate finance and asset allocation by underwriting IP and intangible assets (IA), has found in its analysis of Microsoft's Android patents that only "one fifth of [Microsoft's "Android" patent] portfolio was commercially relevant, casting doubt on the overall viability of the Microsoft licensing packages."
Even people close to Microsoft are finding its Android patents to be far weaker than they first thought. Florian Mueller, an Oracle and former Microsoft consultant and editor of FOSS Patents, said: "If we look at it in terms of Microsoft patents that are presently (after four years of litigation) enforceable against Android devices, there's only one, and it covers the scheduling of meetings from a mobile device."
Muller continued, "It's also a fact that Microsoft's Android patent enforcement is now in its 49th month and the aforementioned scheduling feature is the only one of which Microsoft has proved ownership in court so far. I repeat, so far."
In the current Microsoft v. Samsung litigation, the focus is on how Microsoft's purchase of Nokia smartphone business may or may not have invalidated the Microsoft-Samsung patent agreement; however, there's little doubt that Microsoft's Android patents will be put under greater scrutiny. Sources close to the issue also indicate that they expect Microsoft's patents to be attacked directly in the court if Samsung can't evade paying the interest due on its billion dollar payment in 2013 and the invoiced, but not yet due, billion plus dollars it will owe Microsoft for 2014.
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