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Microsoft Inks Android Patent Deal with Samsung, to Google's Chagrin

Microsoft and Samsung signed an intellectual property agreement this week that lets Samsung use Google's Android OS in Samsung mobile device products.

Microsoft's aggressive patent strategy in the mobile-device industry has created so many love triangles and bitter breakups that even the most ardent soap opera or reality-TV fan would have trouble keeping score (see "Microsoft, Google and the Game of Patents"). This week's Android cross-licensing agreement between Microsoft and Samsung has set off a whole new round of alliances and suspicion that once again ensnares some of the industry's biggest names.

Simply put, the crux of this agreement is that Samsung will pay Microsoft royalties for using Google's Android operating system in tablets and mobile phones.

"Microsoft and Samsung see the opportunity for dramatic growth in Windows Phone and we're investing to make that a reality," said Andy Lees, president of Microsoft's Windows Phone Division, in a press release. "Microsoft believes in a model where all our partners can grow and profit based on our platform."

Evidently, Microsoft also believes in hanging what it considers to be a strong patent portfolio over the heads of device makers that use Android; the Redmond software giant apparently holds the position that Android violates at least some of the patents in Microsoft's mobile-OS portfolio. A paragraph in a recent Microsoft blog entry lays out the company's mobile-patent situation in simple terms:

"Together with the license agreement signed last year with HTC, today's agreement with Samsung means that the top two Android handset manufacturers in the United States have now acquired licenses to Microsoft's patent portfolio. These two companies together accounted for more than half of all Android phones sold in the U.S. over the past year. That leaves Motorola Mobility, with which Microsoft is currently in litigation, as the only major Android smartphone manufacturer in the U.S. without a license."

If the name Motorola Mobility sounds familiar, that's because Google recently announced that it would buy the company for $12.5 billion, a purchase that is still pending. One of the obvious motivations for Google's acquisition was Motorola's patent portfolio, which the search monster apparently hoped to use to fend off disputes from patent holders such as Microsoft.

However, according to the Korea Times via GigaOM, Samsung, which holds quite a patent portfolio of its own, apparently wasn't sure that Google's Motorola buy would do any good in fending off patent problems and signed a deal with Microsoft, anyway.

Outraged as always when these matters arise, Google issued a statement accusing Microsoft of extortion. But Microsoft brushed away those claims, obliquely suggesting that Google might do well to follow the lead of device makers such as Samsung and HTC that have reached patent agreements with Microsoft.

Extortion or not, Microsoft's mobile patent strategy has brought in revenue at a time when its own mobile OS, Windows Phone 7, continues to struggle for market share. Goldman Sachs says that Microsoft will rake in nearly $450 million in revenue from Android patent agreements in 2012. How much damage Microsoft's aggressiveness will do to the Android OS -- and what kind of impact it will have on relationships with handset and tablet makers -- remains to be seen.

In its blog post, though, Microsoft speculated that "[t]here undoubtedly will be a good deal of additional drama before this new generation of patent issues sorts itself out in its entirety." Of that, there can be little doubt.  

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About the Author

Lee Pender is Redmond Channel Partner magazine's senior editor. You can reach him at lpender@rcpmag.com.

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