Microsoft Earns $5 To $15 From Every Android Device Sold. How and Why ?

Microsoft makes money from every Android manufacturer, earning more money on Android than on it’s Windows Phone OS

Andriod and iOS dominates the mobile market-share while Microsoft’s Windows Phone OS remains in distant 3rd position with less than 5% market-share. While this remains a puzzle Microsoft’s new CEO Satya Nadella will need to solve, it would interest you to know that Microsoft receives as much as $15 from every Android device sold.

The software giant’s makes at least $2 billion per year from Android. Your jaw shouldn’t drop because the company earned it as it appears they saw today some decades ago and created a patent which Android apparently infringes on. Microsoft receives royalties from Android vendors who produce smartphones, tablets and phablets- any hardware that’s powered by Android OS.

Basically, Microsoft tells Android vendors that Android infringes on their patents, so manufacturers have to capture Microsoft in their financial settlement. If this is breached, Microsoft could sue them. No manufacturer would want litigation with Microsoft, especially over an issue that they are less likely to win, not excluding the fact that Microsoft is a cash cow.

There is no official statement showing how much Andriod manufacturers pay Microsoft as royalty fees, but Citi analysts believes HTC pays Microsoft $5 from every Android device sold. Further reports from South Korean Maeil Business Newspaper suggested that Microsoft wanted $15 from Samsung per Android device sold, but Samsung was making a case to pay lower, $10 per Android device sold.

Microsoft, like Apple has a lot of software patents and one of them relates to the usage of Standard FAT file system SD cards. The FAT patent applies to Microsoft’s File Allocation Table (FAT) file system which needs to be implemented so SD cards can be read on mobile devices. However, the European version of this patent has been ruled invalid by a German court.

In 2012, Microsoft reported that 70% of Android devices sold were now covered by their patent licensing agreements.