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Nokia's Chief Executive Stephen Elop gestures during a presentation at the Mobile World Congress in Barcelona, February 24, 2014. Nokia, soon to be acquired by Microsoft Corp, is turning to software created by arch-rival Google for a new line of phones it hopes will make it a late contender in the dynamic low-cost smartphone market. Its first model, the Nokia X, will rely upon an open version of the Android mobile software system created by Google that has become the world's most popular software used in smartphones. REUTERS/Gustau Nacarino (SPAIN - Tags: BUSINESS TELECOMS) - RTX19EGD
Reuters/Gustau Nacarino
Microsoft’s own phones aren’t getting it anywhere.

Microsoft makes more money from Samsung than from Skype, Windows Phone, and Xbox combined

Kabir Chibber
By Kabir Chibber


Android—the most widely-used mobile operating system in the world made by Google—actually owes a lot to patents owned by its erstwhile rival, Microsoft. There has been a lot of speculation about just how much Microsoft makes from royalty fees from Android handset users like Samsung and HTC. A glimpse was revealed when Microsoft said in a legal filing that Samsung, the biggest Android phonemaker in the world, paid the software maker more than $1 billion a year to use its technology in Samsung phones.

To put that into perspective, that is more than the $848 million that Microsoft made last year in operating income in its Entertainment and Devices Division, which includes the Xbox console—including Kinect and Xbox Live internet gaming network—as well as online video-calling service Skype, and its Windows Phone line. Samsung’s fees also compare favorably to Microsoft’s search engine Bing and the MSN Network. That division made a loss of $1.3 billion last year.

Another way to put that in perspective—Microsoft makes more from Samsung in a year than Apple won in court after famously suing Samsung in California over violating its patents. And that doesn’t include the money that Microsoft makes from the other Android phone manufacturers. As the Wall Street Journal reported, the filing that revealed the $1 billion figure was previously redacted and included in documents in court, where Microsoft is accusing Samsung of failing to honor a 2011 patent-licensing agreement.

How much is Android actually based on Microsoft technology? When the Chinese ministry of commerce approved Microsoft’s purchase of Nokia in April, Microsoft said the authorities “concluded after its investigation that Microsoft holds approximately 200 patent families that are necessary to build an Android smartphone.”

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