Microsoft inks tenth Android licensing deal

by Phil Hornshaw

Microsoft continues to leverage its technology patents by looking to companies that make smartphones and tablets using Google’s Android operating system, landing its tenth licensing deal last week.

The deal was struck with Chinese tech company Compal Electronics, according to a report from TechCrunch. Compal joins a list that includes Acer, Quanta, Wistron and General Dynamics Itronix, as well as Android’s two biggest smartphone makers, Samsung and HTC. TechCrunch reports this is Microsoft’s ninth patent deal signed in just the last four months.

Here’s a quote outlining the deal from TechCrunch:

According to the release, the patent agreement covers any tablets, mobile phones, e-readers and other consumer-focused devices running the Android or Chrome OS Platform. Similar to the Quanta deal, Compal Electronics will pay out royalties on phones, tablets or e-readers that run on Android or Chrome OS. As with many of these deals, the exact structure of the royalty fees is unknown.

Microsoft revealed in a blog post that with this deal, “more than half the world’s ODM (original design manufacturer) industry for Android and Chrome devices is now under license to Microsoft’s patent portfolio.”

The most notable of such deals was with Samsung a few weeks back that marked something of a tectonic shift in the patent discussion. With Samsung choosing to go with a license for its devices, it signaled that even the biggest companies have to pay Microsoft in order to make their devices. This pretty much signals that other, smaller device makers are going to have to pay as well. Microsoft makes its own operating system, Windows Phone 7, but even if it is out-competed by Android, it still gets to draw licensing fees on Android devices.

When Microsoft made the deal with Samsung, Google called it extortion. Samsung is the largest maker of Android devices and, as of last quarter, the smartphone maker with the biggest share of the market (it beat out Apple for the first time). Despite Google’s objections, it has the desired effect for Microsoft: users either pay to license Android, or they decide to make Windows Phone 7 devices.

Google, on the other hand, has said it will step up its work to back-up Android device makers when they go to court with companies like Microsoft and Apple, which is actively suing Samsung, HTC and Motorola Mobility. With nine companies having made contracts with Microsoft in just the last four months, Google has a pretty big problem – Android is no longer free if device-makers have to expect to pay fees to Microsoft. Either Google works to stop these patent issues, or it risks Android losing its “free” status, and thus loses some of its draw among device makers.

Android is still the most popular smartphone platform in the world, with Google saying that more than 190 million Android devices have been activated across the globe. But with patent issues such as this one with Microsoft or with Apple, Google could lose control over its own “open source” business model, so expect the search giant to do everything it can to stop that from happening.