Microsoft Makes an Astonishing $2 Billion Per Year From Android Patent Royalties 304
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."
Gates was on the right track.. (Score:5, Insightful)
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)
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the headline says that $2 billion is astonishing. but what are good benchmarks here? what is their revenue from windows phones? would another metric be better?
Re:Gates was on the right track.. (Score:5, Interesting)
This gets to an odd contradiction right in the summary: the mobile division is "burning serious cash," yet also making $2B which is "pretty much all profit." It's as if the author sees no connection between investing in a business unit to generate intellectual property, and subsequently profiting from that investment.
Re:Gates was on the right track.. (Score:5, Informative)
Most of the intellectual property (basically just FAT licenses) actually came from the windows division. If you want your phone to plug into a windows machine you pay the short ugly looking character at the bridge.
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Re:Gates was on the right track.. (Score:4, Informative)
I'm surprised phone manufacturers have not abandoned FAT. Since Android 4.0 devices have appeared as MTP storage devices to computers. MTP abstracts away the underlying filesystem so they could use EXT3 or pretty much anything they wanted to.
I suppose maybe there is a case for using FAT on SD cards, but many phones only use internal memory anyway. MTP is the only way it will ever be accessed.
Re:Gates was on the right track.. (Score:4, Informative)
They can't do that because Windows users will want to put the card in their PC to pull photos off.
But, there isn't any reason a proper ext3 or ext4 driver couldn't be ported to Windows. http://www.howtoforge.com/access-linux-partitions-from-windows [howtoforge.com]
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It's almost like there was some Fox-newsish bias against Microsoft...
I'm still quivering from their business tactics, especially back in the 90s, but now that I'm older and wiser, I gather that in the business world, the ladder is made of other people. Doesn't mean I'm happy about it, it just means that Microsoft is likely middle of the pack on ethics.
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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
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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?
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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.
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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.
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Plus, physical consoles were pretty much always loss leaders... Sega, Sony, Nintendo would lose money on their hardware and make it up on selling titles - both their own and from third-party developers. Is Microsoft not including all of profits from licensing in their reports?
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Plus, physical consoles were pretty much always loss leaders... Sega, Sony, Nintendo would lose money on their hardware and make it up on selling titles - both their own and from third-party developers. Is Microsoft not including all of profits from licensing in their reports?
That's including all licensing fees, Live subscriptions, etc. The XBOX division as a whole is billions of dollars in the red.
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Services.
A whole shitload of the XBOX is based on on line servers or gold membership for usability If MS decided to shut it all down, your single player disc based games will still work, but all the rest is gone.
Offline multiplayer (Score:3)
If MS decided to shut it all down, your single player disc based games will still work, but all the rest is gone.
All the rest? Microsoft shut down Xbox Live for the original Xbox, and as I understand it, same-screen multiplayer and System Link multiplayer kept right on working.
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With the original xbox, online play was often added as an afterthought to many games...
For many games on the 360, online play is an integral part of the game and in many games online is the only way to play multiplayer, direct lan connections and split screen are often not supported.
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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
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Two billion bucks... (Score:2)
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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)
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)
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.
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common misconception. basic laws not patentable (Score:5, Interesting)
> 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)
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..
time or cost. 99.95 by size (Score:2)
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
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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.
ps - you're right, fool (Score:3)
> 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
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It has nothing to do with hours, salary, etc.
If the math was done 1000 years ago and still used today that still comprises part of that software - it's nothing about hours spent.
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Nor are games ideas, as shown by Zynga. Copyright, yes, patents, no. You shouldn't be able to patent ideas, but with software, somehow it snuck through.
patent vs copyright (Score:5, Interesting)
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.
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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
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If its an open standard why should it be patented at all? Heck that is the problem with this line of thought.
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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
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One might say that math is a subset of logic. Software is a syntax that represents logic. Software is just a way to represent math.
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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...
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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.
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Many patents "obvious to one skilled in the art" these days are also painfully obvious to an average person with common sense.
Re:Two billion bucks... (Score:4, Insightful)
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They have these things called drivers that add additional functionality to Windows. It would only take one popular device to install that driver and suddenly exFAT is dead in the water.
Re:Two billion bucks... (Score:5, Interesting)
I have never understood this. Windows users are used to installing drivers for each new piece of hardware. Why not bundle an ext4 driver? The device could even have a small FAT partiton (without the patented parts of FAT) that contains the driver for the larger ext4 partition.
Manufacturers have allowed the situation to exist.
Re:Two billion bucks... (Score:4, Interesting)
For some reason filesystem drivers (be they physical, usb, network, etc) appear to be VERY hard to write for windows. I have yet to see a 3rd party filesystem driver for windows that wasn't either broken or unstable. This includes NFS, EXT, even encrypted volumes. The best we've been able to get in most cases is a 3rd party file manager that can read/write the partitions, almost none of them work with the default file browser.
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The common use case for USB sticks and such is (was?) to plug it into other people's computers, to quickly transfer files etc. There's no opportunity to install the driver there, nor would any sane person permit such.
A better question is, why not just use UDF? Windows supports it for both reading and writing, beginning with Vista (XP supported it read-only). OS X and Linux both fully support it. No patent fees.
Because it isn't April 2014 yet (Score:4, Insightful)
A better question is, why not just use UDF? Windows supports it for both reading and writing, beginning with Vista (XP supported it read-only).
Because it isn't April 2014 yet, and Windows XP still supports it only read-only.
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1: Buy or use the courts to obtain trivial patents (Score:2)
2: ???
3: Profit!
Value added? (Score:3)
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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.
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In the US, the purpose of a patent is "To promote the Progress of Science and useful Arts", as explicitly stated in the Constitution.
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then patents are subtracting rather than adding value to society
Blasphemy!
I don't go scanning patent filings when working (Score:2)
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.
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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
Re:Value added? (Score:4, Interesting)
That's only potentially true when the patents are disclosed. It's fashionable to not disclose what the specific patents argued to be infringed actually are (or the mechanics of how they're infringed) when trying to license a portfolio.
Can't work around a patent when you don't know what it is.
Is Apple paying the same royalties? (Score:2)
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.
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Apple and Microsoft have a lot of long running cross-licencing agreements which almost certainly cover the patents in question.
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They are under NDA. IIRC, Motorola called their bluff and Microsoft never even sued.
What about the manufacturers? Google? (Score:2)
If Microsoft is making $2,000,000,000 off Android, how much is Google and the manufacturers making off the platform?
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Microsoft isn't patent trolling here. They would be patent trolling if they were simply holding onto broadly defined patents to use them offensively. The patents in question, which I believe relate to data storage and file systems, have been used by Microsoft for a very long time and have been challenged unsuccessfully before. Microsoft's own engineers did the work, not Google's. Google and various Android manufacturers are free to not implement them.
Re:What about the manufacturers? Google? (Score:5, Insightful)
They're trolling.
So they're indirect patent trolls via Intellectual Ventures and Rockstar?
Not as long as Microsoft filesystems are the de-facto file systems for SD cards by virtue of their desktop monopoly.
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Right, Microsoft is abusing their MONOPOLY, not patent trolling.
And there certainly are workarounds Google could implement. How about if USB-connected Android phones presented a small FAT12 (or ISO9660, or UFS) partition to the OS, which merely contained a (8.3 file-name) installer for the Windows EXT2 file system driver? That would result in widespread desktop support for EXT2 file systems,
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There is a difference between an invention and an idea. There is also a difference licensing and extortion.
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Better yet, keep the SD cards and format them with good file systems like ext4.
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Citation? B&N challenged the patents and it resulted in a partially sealed settlement. The patents were judged on their merits.
Also, how can it not be trolling when Microsoft
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Microsoft rarely takes allegations of infringement to court, they almost always prefer to settle for royalties or cross-licencing. That being said, the FAT patents have survived many legal challenge and their validity has been upheld.
http://news.cnet.com/Microsofts-file-system-patent-upheld/2100-1012_3-6025447.html [cnet.com]
It's not trolling because Microsoft operates in the mobile market, designed the systems in question as a part of their market activities, and continues to use and license the systems in question a
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Trolling? MS makes a product in the mobile space, and has for a LONG time (see Windows CE, and CE based phones), they don't meet the definition of a patent troll in any way, shape, or form.
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but those are only 4.0 or 4.1, so they can't access the Google Play store
Huh? My 2.3 phone accesses the Play store just as easily as my 4.3 tablet.
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Re:really? XBox? we sure about that? (Score:5, Interesting)
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At a guess I'd say Xbox has cost Microsoft somewhere north of 36 billion dollars for development costs, annual losses, and the write-down because of the Red Ring of Death fiasco.
Being able to write off 36 billion dollars and not care is VERY deep pockets.
Re:really? XBox? we sure about that? (Score:5, Funny)
its got netflix support
What doesn't? I think my hedge clippers have Netflix..
Re:really? XBox? we sure about that? (Score:4, Funny)
Does it work without a Hedge Clippers Live Gold subscription?
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And yet Netflix is a no-go on any Linux/X11 systems, and it took them forever to cave-in and start supporting Android.
If I'm spending my money on video delivery, I'll give it to Hulu, since they are slightly less customer-rapey than Netflix.
Re:really? XBox? we sure about that? (Score:4, Informative)
It only has NetFlix support if you pay MS monthly. It's free on every other platform.
A grade patent holding and hardware company (Score:2)
Patents - Copyright for the 21st Century (Score:5, Insightful)
Re:Patents - Copyright for the 21st Century (Score:4, Interesting)
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.
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Why should patent titans strangle 3D printing when the feds will do that for them?
95% margin? (Score:2)
So wtf does MS do for the 5%?
He estimates (Score:3)
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."
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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 (Score:2)
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.
All the more reason for Rockstar to attack! (Score:2)
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
TL;DR (Score:2)
Those who can, do.
Those who can't survive on patent money.
Pure profit? (Score:2)
And the patent system is good thing? (Score:2)
Nope. This shit has got to go.
Disgusting (Score:2)
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)
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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In the US, you can get pure plans and unlocked phones, too.
Go to amazon.com and search "unlocked cell phone."
Plenty of stores have them, even your local drug store.
Any cell phone carrier offers plans without a phone bundled in.
T-Mobile and many smaller carriers base their business around them. For instance, here is an advertisement: http://www.t-mobile.com/bring-your-own-phone.html [t-mobile.com]
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Where you live maybe.
In some places it's typical to purchase your phone outright - i.e. no plans to hide costs in.
Re:They finally made money out of Linux. (Score:5, Insightful)
Funny.
But seriously, open your fucking eyes, people. Here we have a private enterprise that put a break on the development of a personal computer for 20 something years, and now it's taxing the development and adoption of an operating system that was written from scratch, using UNIX philosophy which Micro$oft neither invented nor indeed implemented.
Just like copyrights, patents are not worth crap to individual inventors because the chances of making a return on the investment with one, two, or even a hundred inventions are miniscule. So the inventors sign over their inventions to capitalists for either a small lump sum or a regular paycheck; and so do the artist with copyright, because it ultimately makes sense for them economically. The capitalists, on the other hand, are wielding tens of thousands of patents; just like the art producers are controlling significant proportions of the entire catalog. And when they control, say, 10% of all published ideas, they can finally make patents (and copyrights) pay. The art business is ugly, we all heard that, but the technology is uglier! With patents, in particular, the best way to maximize the return is by suing everyone who dares to innovate. The point being, everyone has to keep using the same shit invented 20 or 40 years ago, and pay, pay, and pay again to some bastard who neither invented nor encouraged invention [1], but simply invested into exclusive rights. This was true for the steam engine, and it is true for the latest, smallest, sexiest computers of tomorrow.
[1] Don't believe me? Look it up. Multiple studies were conducted, and no correlation was found between patent law strength on one hand and the rate of innovation on the other.
Re:They finally made money out of Linux. (Score:5, Informative)
I am not even going to argue with you about "innovations in computing", what with the best OS to date written by a Finn. How about this instead:
Empirically, the nation with the strongest army is also the nation that is responsible for most of the innovations in computing.
Empirically, the nation with the largest inmate population (both absolute and relative to population size) is also the nation that is responsible for most of the innovations in computing.
Empirically, the nation with the highest healthcare costs (both absolute and relative to GDP) is also the nation that is responsible for most of the innovations in computing.