Microsoft has quickly become one of the most powerful patent licensing firms in the world. Following its deals to license patents to original design manufacturers (ODM) like Foxconn it has amassed a flow of cash on all the patents it has created during its illustrious career.
Redmond has reported that 50 percent of the world's Android phones are now made by firms that license its patents. According to a 2011 report from paidcontent.org, license fees actually made more money for Microsoft than Windows Phone devices.
That figure will likely roll over to the new line of Windows Phone if the firm continues to muscle Android makers into paying licence fees. Not to mention, if Windows Phone continues to struggle to gain a foothold in the market.
As Microsoft continues to licence its patents it will continue to make money hand over fist. Nothing about what the firm is doing is illegal. The last time a competitor argued that it was they lost.
Barnes & Nobles tried to fight Microsoft in court last year. The Nook maker argued that Microsoft tactics were of the anti-trust variety. Of course, a US judge dismissed that thought and Barnes & Noble ended up signing a licensing pact with Redmond.
The only one who has really put up a fight with Microsoft and its patent portfolio is Google. By way of its subsidiary Motorola, the search giant has fought hard to avoid paying fees to Microsoft.
If anyone could put up a true fight it is Google. However, precedent has already been set because of the Barnes & Noble case and it's hard to see a government authority stepping into to stop the Windows maker under current law.
After all, Microsoft did develop the technology completely above board. The R&D department in Redmond is one of the best in the world. So it's not like Microsoft hasn't invented truly ground-breaking tech.
It's just good business for Microsoft to make money on its patents. Perhaps that's part of the problem affecting the wider software industry when it comes to patents.
Overtime, Android handset makers may have to increase their prices because a piece of the pie goes to the licence owner. To cover overheads the next Galaxy phone might cost an even crazier price tag because of patent licence fees.
It hasn't affected prices yet. But that is mostly because margins are still pretty high in the smartphone market.
However, Microsoft may eventually end up being responsible for price hikes on phones it didn't have any effect on making, to cover the cost of licensing its patents.
Hopefully, it may not get to that point and lawmakers will clamp down on patent trolls before it gets out of hand. Unfortunately, they are the only ones in a position to srop it.
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