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Microsoft Puts the Squeeze on Samsung

Microsoft Puts the Squeeze on Samsung

Samsung is the latest company to be pressured by Microsoft into signing licensing agreements over the Korean electronics maker's use of Google's Android OS. Microsoft's reported demand of $15 per handset has struck some observers as rather high, though it's possible that's merely Redmond's opening bid.

By Richard Adhikari LinuxInsider ECT News Network
07/06/11 12:02 PM PT

Microsoft has reportedly trained its Android patent guns on Samsung Electronics, demanding US$15 for every Android-based handset the Korean manufacturer produces.

If true, this could be the highest fee demanded by Redmond for its Android patents so far.

Microsoft is reportedly getting royalties of $5 per Android device from Taiwanese mobile device giant HTC.

The move on Samsung comes on the heels of Microsoft's signing up two other companies -- General Dynamics' Itronix division and Taiwanese manufacturer Wistron -- to cough up royalty payments for using Android and, in Wistron's case, Google Chrome in their devices.

"Redmond has figured out how to successfully milk the Android cash cows," Charles King, principal analyst at Pund-IT, told LinuxInsider. "I expect the company will continue adding to its dairy herd over time."

Essentially, Microsoft claims that the Android operating system may contain violations of Redmond patents. The company's attempted to convince companies that use Android in their products to sign licensing agreements to avoid possible future litigation.

"Microsoft is not commenting on this issue," company spokesperson Emma Mahoney told LinuxInsider.

Neither Samsung nor Google had not responded to requests for comment by press time.

Pay a Little Now, or a Lot Later?

Microsoft appears to have stepped up its efforts to get royalty payments from companies using Android or Google Chrome.

Aside from the companies it's already made agreements with, two of its other targets, Barnes & Noble and Motorola, are fighting Microsoft in court over its attempts to get royalty fees from them over their use of Android.

Microsoft paints these agreements as examples of the important role intellectual property plays in ensuring a healthy and vibrant IT ecosystem.

Not everyone agrees.

"Microsoft's approach is to take you into a back room and tell you, 'We have patents, we won't tell you what they are, but a lot of people have agreed to pay up so we have a case,'" Bill Weinberg, principal analyst and consultant at Linux Pundit, told LinuxInsider.

Welcome to the Jungle

Microsoft's strategy in demanding royalties of $15 per Android device Samsung makes remains unclear.

"It seems steep to me, especially given that Microsoft's getting only $5 per handset from HTC," Pund-IT's King said.

It could be that the size of the demand is an opening ploy that Microsoft expects will kick off a round of bargaining, King mused.

Or it could be that Samsung is a better target.

"Perhaps Microsoft thinks Samsung has deeper pockets or stands to profit more from Android than HTC, especially since it's moving toward the tablet space more aggressively," King suggested.

Samsung is the leader in the Android device space.

Another possibility is that this demand is a preliminary flexing of Microsoft's muscle.

"Maybe Microsoft believes its position for demanding payments from Android product developers is so strongly established that it can significantly up the ante," King hypothesized.

"That $15 per device is a starting position," Linux Pundit's Weinberg opined.

There's No Such Thing as Pure Hate

Historically, Microsoft has had a rocky relationship with open source software in general and Linux in particular, and its moves in regard to Android, which is based on Linux, could strengthen the generally unkind view Linux fans have of the company.

However, Microsoft has embraced certain points of open source and has created the CodePlex Foundation, Linux Pundit's Weinberg pointed out.

Redmond changed the name of the organization to the Outercurve Foundation.

Although Microsoft has "made a huge effort internally to shift culturally, it's not as if they sit down every day and have lunch with a penguin," Weinberg said.

"Microsoft have done a lot, but it's not the same as a complete embrace, and, where it suits their needs, they're still fighting the old battle," Weinberg added. "It's just more nuanced."


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