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Microsoft Android Businesses Google Patents The Almighty Buck

Microsoft Makes an Astonishing $2 Billion Per Year From Android Patent Royalties 304

Posted by Soulskill from the isn't-innovation-wonderful dept.
mrspoonsi sends this report from Business Insider: "Microsoft is generating $2 billion per year in revenue from Android patent royalties, says Nomura analyst Rick Sherlund in a new note on the company. He estimates that the Android revenue has a 95% margin, so it's pretty much all profit. This money, says Sherlund, helps Microsoft hide the fact that its mobile and Xbox groups are burning serious cash."
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Microsoft Makes an Astonishing $2 Billion Per Year From Android Patent Royalties More

Microsoft Makes an Astonishing $2 Billion Per Year From Android Patent Royalties

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  • Gates was on the right track.. (Score:5, Insightful)

    by gandhi_2 ( 1108023 ) on Wednesday November 06, 2013 @05:51PM (#45349725) Homepage

    Hardware is cheap.
    Software is expensive.
    Charging for IDEAS, though... THAT is where the real money is.

    • Re:Gates was on the right track.. (Score:5, Funny)

      by flargleblarg ( 685368 ) on Wednesday November 06, 2013 @06:02PM (#45349859)
      And this is why we can't have nice things.

    • Re: (Score:2, Interesting)

      by Anonymous Coward

      says Sherlund, helps Microsoft hide the fact that its mobile and Xbox groups are burning serious cash

      If you exclude Halo 2 and 3. Also if you dig into the financials of the xbox you will see a serious money sink. I got 3 prospectuses from them. I thought I had to be reading it wrong. No they were really spending that kind of money with a massive no ROI. I sold my stock.

      Dont get me wrong. XBOX is wildly popular. But profitable? Not so much.

      Having not see a recent prospectus I can just imagine the ble

      • Re: (Score:2)

        by ackthpt ( 218170 )

        says Sherlund, helps Microsoft hide the fact that its mobile and Xbox groups are burning serious cash

        If you exclude Halo 2 and 3. Also if you dig into the financials of the xbox you will see a serious money sink. I got 3 prospectuses from them. I thought I had to be reading it wrong. No they were really spending that kind of money with a massive no ROI. I sold my stock.

        Dont get me wrong. XBOX is wildly popular. But profitable? Not so much.

        Having not see a recent prospectus I can just imagine the bleed on the phone division. Though that division did come up with many of those patents. And before everyone goes 'they are so obvious'. MS did something you didnt they made a patent out of it. The had been working on the smart phone since about 1998. They unfortunately came up with WinCE to show for it.

        Never mind that gamers tend to be very fickle. If a better game comes out on Sony or Nintendo, the XBox gathers dust. So Microsoft's efforts to use the XBox as a gateway into pwning your home, making you rely upon them for $ervice$ isn't panning like they wished. I still can't fathom why they continue to fool around in this non-core area. Why not just buy a movie studio or a bunch of golf courses?

        • Re: (Score:3)

          by Bert64 ( 520050 )

          Not so much that users are fickle, more to do with the fact that here is very little lock-in on games consoles...
          Each generation tends to be incompatible with the previous, and most games run on all the major consoles so there is very little to stop you from choosing a different brand of console when you move on to the next generation.

      • Not every littlw subproject has to be profitable - you just need the whole shebang to make money, and it's often not obvious where the profitability will emerge.

    • Re: (Score:3, Insightful)

      by alvinrod ( 889928 )
      Hey, if you can't beat 'em, joi^H^H^H sue 'em.

      Seriously though, the system needs to be changed. When the only way to play the game involves suing everyone else, there's obviously something wrong that needs fixing. Unfortunately, there're so many other things in this country that are screwed up, that it's hard to put patent reform before fixing health care, ending spying on citizens, stopping discrimination based on orientation, reducing our involvement in foreign conflicts, and a long list of other issue
  • ...for a bunch of "inventions" that are almost certainly blindingly obvious to anybody over the age of four, and under the age of 55. No, the patent system isn't broken at all, nuh uh. Why do you ask?

    • Your being unfair. They're blindingly obvious to 60% of the people involved in the right industry. Software/hardware illiterate people would have no idea what you're talking about.

      • Re:Two billion bucks... (Score:5, Informative)

        by ledow ( 319597 ) on Wednesday November 06, 2013 @06:00PM (#45349843) Homepage

        However the test used in the patent systems worldwide tends to be along the lines:

        "to one skilled in the art".

        i.e. if it's blindingly obvious to someone who does similar work all day long, professionally, every day, then it shouldn't actually be patentable at all.

        • Re:Two billion bucks... (Score:5, Insightful)

          by girlintraining ( 1395911 ) on Wednesday November 06, 2013 @06:07PM (#45349917)

          However the test used in the patent systems worldwide tends to be along the lines: "to one skilled in the art".

          It's the same in America. The difference is, the art isn't engineering, it's lawyering.

        • Re: (Score:3)

          by drakaan ( 688386 )
          yep. But that's beside the point that software is math, and math isn't supposed to be patentable.

          • common misconception. basic laws not patentable (Score:5, Interesting)

            by raymorris ( 2726007 ) on Wednesday November 06, 2013 @06:37PM (#45350243) Journal

            > software is math

            Games are art, and are software.
            Most games are 95% art, 5% math, and 100% software.
            Math CAN be done as software, but so can art and many other non-math things. Some software is math. A LOT of software has little to do with math.

            > math isn't supposed to be patentable.

            That's a common misconception, started and encouraged by people with a particular agenda. The rule in the US is:

                The LAWS of nature, including mathematics, are not patentable.

            Note that it's the basic laws that aren't patentable. Things that USE those laws are.

            Gravity isn't patentable. An elevator is.
            Momentum isn't patentable. A brake system is.
            Division isn't patentable. eBay's feedback system is.
            Light reflection isn't patentable. The way Blender simulates reflection is, if it's novel.

            • Re:common misconception. basic laws not patentable (Score:5, Insightful)

              by Mr0bvious ( 968303 ) on Wednesday November 06, 2013 @07:01PM (#45350587)

              Most games are 95% art, 5% math, and 100% software.

              Huh? that's some crazy statistics?

              How much does math weigh compared to art?

              How do you measure how much math there is compared to art? Is it the byte size of the executable (minus any embedded art) vs the byte size of the art?

              I'm just confused how one could have any measure of either against each other...

              My house is 99.99% bricks and mortar and 0.01% design... (using some arbitrary measure I just thought of)

              A LOT of software has little to do with math.

              Sorry, but ALL software is an expression of math..

              • I'm thinking from the perspective of a creator or consumer of a game. Over 90 percent of the budget will grow into art versus the math for collision detection and such. The buyer / player chooses a game primarily based on it's characters, graphics, and storyline, all artistic elements. I'd bet more than 90% of players have commented on a games graphics and fewer than 5% have said somethingl like "wow this game has awesome physics stimulation".

                Byte size isn't very meaningful, of course. By that measure, g

                • This has nothing to do with budgets or cost..

                  If my house cost $10 in bricks and mortar and $200,000 for light fittings. The house took 3 men 3 months to complete and the lights took 5 men 3 months to complete. My house is 99.99995% light fittings.

                  What's more, the math 'effort' was probably mostly implemented before the game was ever even thought of - but it is still there, even if it's effort free.

                • > Sorry, but ALL software is an expression of math.

                  Thinking about that for a minute, seems that statement his true, and almost meaningless such that it's misleading. Lara Croft is of course software, and pure art. No mathematicians were harmed in the making of this character. Music - rhythm, tone, and harmony is math. Although harmony is a mathematical phenomenon, you would be fooling yourself, and doing yourself a disservice, to say "eh, music is just math."

                  Gears and levers are an expression of divis

          • patent vs copyright (Score:5, Interesting)

            by Chirs ( 87576 ) on Wednesday November 06, 2013 @06:38PM (#45350259)

            Technically it's only the implementation of an idea that is supposed to be patentable. With physical patents if you can accomplish the same thing by other means then it's fair game.

            Somehow in software they've decided to allow patenting the *idea* of momentum when scrolling via swiping, or bounceback when you hit the end.

            The equivalent to patenting physical implementations would be to allow protection of their *implementation* of an idea--and in the software world that implementation is already protected by copyright, so there's really no need for software patents.

            • The equivalent to patenting physical implementations would be to allow protection of their *implementation* of an idea--and in the software world that implementation is already protected by copyright, so there's really no need for software patents.

              Copyright doesn't prevent clean-room reverse-engineering, while patents do.

              And while "momentum when scrolling" makes a nice silly little example, there are plenty of legitimate examples where patents make sense. Video and audio codecs, for instance, only patent t

              • If its an open standard why should it be patented at all? Heck that is the problem with this line of thought.

          • Re: (Score:2)

            by msobkow ( 48369 )

            Only in the most technical sense that computers interpret numbers to operate.

            Very little of the programming I've done over the years involved much mathematics. Even with big batch jobs that did bill processing, the math itself was only a very small part of the code compared to the SQL, cursor iteration, error handling, and reporting aspects of the programs.

            There is also the question of whether something like queueing theory should really be considered "mathematics." Yes, it relies on statistics and c

        • Is it skilled in the art at the time of filing or at the time that the patent is granted by the USPO which can be many years later?

          I have a few patents and one took 7yrs to get through the USPO...

          Hindsight is 20/20...

        • Re: (Score:3)

          by Alef ( 605149 )
          I think "obvious to someone skilled in the art" is actually a lousy test. What's interesting is whether the invention will surface even without granting a state-sanctioned monopoly on it. If there is a million engineers worldwide working in a certain field, and an invention is non-obvious to 99% of them, there are still 10000 who could do something similar. To grant a single one of them a 20 year monopoly on it is hardly a win for society. It might have been different back in the olden days, when skilled en

          • It might have been different back in the olden days, when skilled engineers were actually rare.

            There was a very interesting documentary series a few decades ago ("Connections" by James Burke) that looked at technology through the ages. One of the common themes was how technologies were invented and re-invented at different times and places. It's only modern communications that prevent re-invention, because the knowledge of the "original" invention travels around the world.

        • Many patents "obvious to one skilled in the art" these days are also painfully obvious to an average person with common sense.

  • Value added? (Score:3)

    by Kongming ( 448396 ) on Wednesday November 06, 2013 @05:56PM (#45349797)
    I legitimately wonder how many (if any) of the features covered by the patents in question would not have been implemented in Android if not for the work of whoever filed the patent. If the answer is few or none, then patents are subtracting rather than adding value to society in this domain. If the answer is many, then there is at least an argument to be made.

    • You can divide a sandwich among many, but you cannot digest it in a collective stomach. The purpose of a patent is not to add value to society.

      • Re: (Score:2)

        by sconeu ( 64226 )

        In the US, the purpose of a patent is "To promote the Progress of Science and useful Arts", as explicitly stated in the Constitution.

    • then patents are subtracting rather than adding value to society

      Blasphemy!

    • I don't know about you, but I certainly don't go searching patent applications when implementing something.

      I'd argue that if multiple people independently invent something that is covered under patent then the patent should be invalidated as too obvious.

    • Re: (Score:3)

      by tlhIngan ( 30335 )

      I legitimately wonder how many (if any) of the features covered by the patents in question would not have been implemented in Android if not for the work of whoever filed the patent. If the answer is few or none, then patents are subtracting rather than adding value to society in this domain. If the answer is many, then there is at least an argument to be made.

      Except Android works around a bunch of them, and some of them are to the benefit of them all because it forced Google to innovate and we're better fo

  • And if not, what features/functions of Android are the patents for? It strikes me that most things Android does that would be covered by a patent would also apply to Apple.

    Now, Apple may have other cross-licensing/patent agreements for other stuff so they aren't making a cash payment to MS, but instead a payment in kind, but I'm still curious what Android does that MS holds patents on.

  • If Microsoft is making $2,000,000,000 off Android, how much is Google and the manufacturers making off the platform?

  • Comment removed based on user account deletion
  • Shame about the software, but they'll eventually figure it out and stick to what they're good at.

  • Patents - Copyright for the 21st Century (Score:5, Insightful)

    by runeghost ( 2509522 ) on Wednesday November 06, 2013 @06:41PM (#45350283)
    Patents aren't about promoting the progress of science and the useful arts, they're about a business model based on rent-extraction via arcane legal means. As alternative manufacturing options such as 3D printing mature (assuming they're not strangled by the patent titans) patents will become as obsolete and ineffective as copyright is now.

    • Re:Patents - Copyright for the 21st Century (Score:4, Interesting)

      by Opportunist ( 166417 ) on Wednesday November 06, 2013 @07:24PM (#45350849)

      Oh don't worry, that will be the next war. If you thought the copyright war was fierce, wait 'til companies who sell some plastic junk for big bucks because their name is printed to one side or because the part breaks easily and may only be made by the original maker get to feel the loss when people notice that for the price that part costs they could as well buy a 3D printer and be independent from them forever.

      Wait until their business model of vendor lock-in no longer works.

      There are entire companies (and I'm not talking about mom'n'pop shops) dependent on that very model of selling appliances dirt cheap and making money with the spare parts and the consumables. And printer manufacturers are the least of your concern in this matter. You're about to see the battle between people with 3D printers vs. the car industry and its associated industries.

      And this will be very, very ugly. If you thought the MAFIAA had ties in politics, wait 'til this turd hits the spinning blades. This time a LOT of jobs are on the line, and I'd be very surprised if that one goes down with a breeze. Expect some legal shit to come down that makes the whole copyright legal bull seem legit, sane and balanced.

    • Why should patent titans strangle 3D printing when the feds will do that for them?

  • So wtf does MS do for the 5%?

  • He estimates (Score:3)

    by jamesl ( 106902 ) on Wednesday November 06, 2013 @06:50PM (#45350399)

    Rick Sherlund estimates. He doesn't know. Nobody knows except very senior management at Microsoft and Google.

    The report also contains the following: "Sherlund believes Microsoft needs to spin out Xbox. He sees it as an orphan group at Microsoft that doesn't really fit with anything it's doing."

    I guess he hasn't heard of the "Three Screens."

    • Re: (Score:2, Informative)

      by Anonymous Coward

      XBox is Microsoft's doorway into the home. Companies have been fighting for decades to control the living room and there are no clear winners (Wii did well but didn't win). XBox can provide a unified system between TV, computer, and mobile device through Azure. When Microsoft does unification well there would be no need to use any non-Microsoft system.

      There's also the importance of diversification. A company as big as Microsoft shouldn't have only one product.

      Sherlund is blind if he can't see how Micros

  • At least someone is making money from Android besides Google and Samsung. I really wish Sony can get their act together and release an amazing phone. They have it in them to be able to do better than Samsung and Apple.

  • Now if they absorb the Blackberry patents they will be unstoppable in the mobile highway patent troll robbery market. Hell people will not even notice if they become the worlds largest patent troll, seems that they are much better at that than actually creating software. Unusual bedfellows Apple and Microsoft?

    Microsoft's so called "IP" is being more valuable than their actual production of software. Microsoft is becoming little more than a huge IP and patent troll firm that has managed with their operatin

  • Those who can, do.
    Those who can't survive on patent money.

  • Pure profit? More like Pure Extortion

  • Nope. This shit has got to go.

  • Let me be one of many to say it is just disgusting.

    Please let software patents die. DIE DIE DIE.

  • The law needs to change (Score:5, Insightful)

    by jonwil ( 467024 ) on Wednesday November 06, 2013 @08:31PM (#45351505)

    It should be ILLEGAL for any company to make statements like "xyz is violating our patents" unless that statement contains details of which patents are being violated and which products/features/etc are doing the violating.

    If Microsoft is forced to reveal in public which patents are being violated and how, it would allow the Linux community to evaluate that information and find prior art where it exists or find ways to make linux not violate the patent (e.g. kernel option to disable the relavent code or rewrite the code to not violate) and generally make it harder for MS)

    Remember the TomTom case, evidence came out about a specific FAT patent related to long file names and TomTom just disabled that feature (since they didn't actually need it)

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