Microsoft Corporation Offers Patent Fee Cut if OEMs Pre-Install Its Apps

Microsoft Corporation

Microsoft Corporation offers patent fee cut if official equipment manufacturers or OEMs pre-install its apps like Office, Skype, OneDrive and OneNote to their Android mobile units. Digitimes Research reports that Microsoft is enticing more OEMs by offering discounts on licensing costs.

For instance, when an Android OEM pays $3 per device for patent license, Microsoft can lessen the fee to $1.5 if the device has few Microsoft apps pre-installed on it. The $1.5 saving per device is big time, especially when the device manufacturer ships 40 million devices annually. That is a huge $60 million savings.

The software titan’s revenue from patent licensing is in a substantial growth as Android devices are increasing in shipments. Microsoft Corporation offers patent fee cut if OEMs pre-install its apps, as a way to expand the usage of its applications in smartphones and tablets by giving back a part of its income to hardware makers.

Digitimes lately found Microsoft’s offer from the upstream supply chain of smartphones and tablets in China and Taiwan. It is its understanding that Microsoft Corporation has already signed an agreement with more than 10 of its patent licensees including the big names of Samsung Electronics, Pegatron Technology, as well as regional OEMs like TrekStor (Germany), DEXP (Russia), QMobile (Pakistan), Casper (Turkey), JP Sa Couto (Portugal), Hipstreet (Canada), Tecno (Africa) and Datamatic (Italy). These manufacturers may already have agreed to pre-install Excel, Word, OneDrive, OneNote and Skype on their Android devices which will be released to the market this year.

The Redmond, Washington-based tech firm may lure more of its patent licensees to avail of the discount offering, and have its apps pre-installed on the new Android devices. Its list has lots of companies, with Original Device Manufacturers, like HTC Corporation, Hon Hai, Compal Electronics, ZTE Corporation, Quanta Computer Inc. and LG Electronics.

It may be difficult for Android OS maker, Google, to stop its partners from accepting Microsoft Corporation’s attractive offer with the current tough competition among Android devices, which finds other vendors already in losses. A cost cut in licensing fees is an appealing bargain for companies who are looking to cut costs while boosting gross margins. It is anticipated that many Android hardware vendors will accept the deal.

Speaking of patents, Microsoft Corporation this week has lost the first round in its patent battle as allegedly using the technology of patent licensor InterDigital in its smartphones without permission. U.S. International Trade Commission Judge Theodore Essex on Monday said, the Windows software maker infringed two patents of InterDigital’s wireless cellular.

Judge Essex said it will not harm the public if Microsoft Corporation’s devices will be banned import into the U.S. The decision however, is still to be reviewed before implementation.

It was year 2007 when InterDigital, which is based in Wilmington, Delaware, accused Nokia for violating its patents. Its patent is about moderating the power of a mobile device to lessen signal interference. ITC did not find any violation, but in 2012, the Court of Appeals for the Federal Circuit, overturned its decision for ITC to check again.

The Redmond firm acquired the handset division of Nokia in 2014. While Microsoft Corporation is currently offering patent fee cut if OEMs pre-install its apps, it calls Monday’s court decision of its ITC case number 337-613, one step in the process.

By Judith Aparri

Microsoft News
Digitimes Research

Photo courtesy of James Marvin Phelps – Creativecommons Flickr License

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