Google CEO Eric Schmidt once shared that thanks to Google Search on the iPhone, Google benefits from each handset Apple sells. If Microsoft gets its way, the Google competitor may similarly be seeing some cool cash from each Android handset that's activated.
Microsoft owns a number of wireless patents that the Android platform relies on. Despite Microsoft having a hard time getting its own mobile OS off the ground, it may enjoy enormous success in the mobile space after all, if its legal team can get Android's growing supporters paying up.
HTC, whose Android-based offerings have been key to its growth, entered an agreement with Microsoft in 2010, paying $5 for each Android-running phone that's activated. Now, Microsoft is going after Samsung, looking to claim $15 on each handset. Reuters reported yesterday, citing Korea's Maeil Business Newspaper, that Samsung is haggling to get that figure down to $10.
ComScore this week reported that Android is both the largest smartphone platform in the United States and the fastest growing, gaining 5 market share points in just the last three months (MDP: Gaming And Apps Are Fastest-Growing Mobile Categories).
Samsung is additionally the top handset vendor in the U.S., and worldwide it's expected to beat long-leader Nokia in the coming quarter. During the quarter that wrapped up in June, analysts estimate that Samsung sold nearly 20 million Galaxy S II smartphones.
According to GigaOm, Microsoft has so far entered licensing deals with General Dynamics Itronix, Wistron Corp., Velocity Micro and Okyo Corp., and is expected to begin working through its Android-vendor Rolodex.
With vendors such as Samsung unlikely to swallow the cost — potentially $200 million, in the case of those 20 million Galaxy S devices — there's a question of how those dollars will get divvied up.
Investment firm Moody's reported this week that carriers such as Sprint and MetroPCS are facing increasing challenges, as handset subsidies continue to rise. One bit of relief, it offered, was the increasing popularity of Android, which unlike RIM's and Apple's platforms are open-source and so free to handset makers, which, the report stated, "could drive smartphone costs down."
Perhaps not for long.