Microsoft takes Android Cold War to Foxconn

by Matt Klassen on April 22, 2013

An interesting Android Cold War has been waging for several years now between Microsoft and Google, with the Redmond PC giant fighting this proxy battle with the search engine giant by signing key licensing deals with many of Google’s Android partners, a move that has allowed Microsoft to make more money off Android directly then Google ever has. In fact, while Google touts Android as free and open source, the reality of the situation is that the end price of an Android phone still includes licensing fees, you just happen to pay them directly to Google’s competitors.

For awhile now Microsoft has focused its Android licensing efforts on the front line of the Android ecosystem, tech companies like Samsung, LG, and HTC, but now the PC giant is looking to take this proxy war to the second tier of the Android family by targeting the supply chain, as the company announced it has signed a licensing deal with Hon Hai, parent company of the infamous Foxconn.

The deal means that Microsoft now receives royalties for every Android or Google Chrome device that Foxconn manufacturers, unless of course Microsoft has a separate deal in place with the Foxconn’s client (Samsung, ASUS, HTC etc…), and given that 40 percent of the world’s phones comes Foxconn, it seems Microsoft may have just pulled off the ultimate Android coup.

I have long wondered why Google chose to hand Android out for free to the world, creating an innovative and cost-effective mobile OS that it has diffused throughout the world, yet not creating a direct revenue connection to it…that is until one considers this proxy Cold War with Microsoft.

It’s becoming abundantly clear that Google likely knowingly used Microsoft patents without permission, a costly endeavour should Google actually make money off Android, which of course it doesn’t. Since Android doesn’t generate any direct revenue stream for Google, what sense would there be for Microsoft to tackle the search engine giant directly as the royalties of zero just aren’t that enticing, allowing Google to continue to earn money indirectly of Android advertising.

Now this is where the Android partners come in, as they are companies who make money off Android, thus Microsoft has some financial incentive to protect its intellectual property and, let’s be honest; it’s just easier to intimidate the little Android fish than it is Google itself.

There’s no question that Google has been fuming over Microsoft’s tactics these past few years as the Redmond Company has milked the Android cash cow. The search engine giant has called the licensing efforts ‘extortion,’ and has threatened retaliation, although nothing has ever materialized. Without any response from its tech rival, Microsoft has continued to sign these licensing deals, with this latest agreement with Foxconn parent Hon Hai shaping up to be the most lucrative yet. In fact, as was reported back in 2011, Microsoft still likely makes more off its Android royalty agreements than it does off its own mobile brand.

Microsoft, for its part, has remained tight lipped about exactly what patents Android and Chrome OS infringe upon, the thinking being that if Microsoft made this public, Google would simply rewrite those segments of code and Microsoft would be out in the cold.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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