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Foxconn To Pay Microsoft Royalties for Android Devices

Foxconn To Pay Microsoft Royalties for Android Devices
By Jennifer LeClaire

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"It's significant in the sense that Microsoft has been quite successful gaining licensing deals from almost all the major players in the Android ecosystem," said analyst Greg Sterling of the Hon Hai-Foxconn deal. "Microsoft is making more on licensing than it is on its own mobile strategy with Windows Phone and Surface."
 


Microsoft is flexing its patent muscles in the mobile war against Android. Despite Google's acquisition of Motorola's patent portfolio it seems Microsoft is still finding a way to make some friends of Android pay.

Microsoft signed a deal with Hon Hai, the parent company of Foxconn, to settle a patent dispute without the kind of long, drawn-out court battles we've seen on the Apple vs. Samsung front.

Microsoft and Hon Hai signed a worldwide patent licensing agreement that provides broad coverage under Microsoft's patent portfolio for devices running the Android and Chrome OS, including smartphones, tablets and televisions. Essentially, Foxconn now has to pay Microsoft a fee for every device it manufactures.

How Much Is Microsoft's Payday?

"We are pleased that the list of companies benefiting from Microsoft's Android licensing program now includes the world's largest contract manufacturer, Hon Hai," said Horacio Gutierrez, corporate vice president and deputy general counsel of the Intellectual Property Group at Microsoft. "By licensing both brand name companies and their contract manufacturers, we have successfully increased the overall effectiveness and global reach of the program."

The contents of the licensing agreement are confidential. In other words, we don't know how much Foxconn is shelling out to Microsoft for every Android and Chrome OS smartphone, tablet, television they are manufacturing. What we do know is that Microsoft will get a plentiful payday. Hon Hai joins a growing list of contract manufacturing and original design manufacturing companies with Android and Chrome patent licenses. Hon Hai waxed gracious about the settlement.

"Hon Hai is the world's largest contract electronics manufacturer that holds more than 54,000 patents worldwide," said Samuel Fu, director of the Intellectual Property Department at Hon Hai. "We recognize and respect the importance of international efforts that seek to protect intellectual property. The licensing agreement with Microsoft represents those efforts and our continued support of international trade agreements that facilitate implementation of effective patent protection."

A Significant Deal

Greg Sterling, principal analyst at Sterling Market Intelligence, said the patent licensing agreement was significant.

"It's significant in the sense that Microsoft has been quite successful gaining licensing deals from almost all the major players in the Android ecosystem," he said. "Microsoft is making more on licensing than it is on its own mobile strategy with Windows Phone and Surface, which has been much less successful to date."

As hinted at earlier, this isn't the first time Microsoft has flexed its patent muscle on the Android front. The company's specific patent licensing program for Android device makers has resulted in signed license agreements with numerous companies including Samsung, LG, HTC, Acer and Barnes & Noble.

Redmond has demonstrated an appetite for allowing companies to license its patents rather than rushing to court. Since the company launched its IP licensing program in December 2003, it has entered into more than 1,100 licensing agreements.
 

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