Microsoft now has 10 companies giving them kickbacks every time they build an Android device

Yesterday morning Microsoft announced on their Microsoft on the Issues blog that Compal has just become the 10th company to sign a deal that ensures that they’ll be able to build devices that use Google’s Android software without getting sued. Never heard of Compal? Like Foxconn, the company that Apple uses to build their iPhone, Compal builds devices for other companies that have consumer facing brands. Their speciality is notebook computers. They’re the second largest manufacturer of laptops, right behind Quanta Computer, who by the way signed an agreement with Microsoft less than two weeks ago. This deal with Compal now means Microsoft stands to get a cut of 55% of all the revenues made by original design manufacturers (companies like Compal, Quanta) in Q2 2011 and that 53% of all Android devices sold in the U.S. during the same quarter are potentially feeding Microsoft’s bottom line. In other words, Google’s hard work on Android has resulted in free money for Microsoft that they’ll likely reinvest in Windows Phone.

The topic of software patents is one that stirs up quite a heated debate. We’re on the side of people who say that patents slow down or even abolish innovation. The money that these 10 companies are sending to Microsoft every quarter could have gone towards hiring additional engineers, retooling factories with better equipment, or other useful functions that create a highly competitive ecosystem. What’s more frightening is that Microsoft isn’t even done. They’re currently in litigation with Motorola Mobility, Inventec, Foxconn, and Barnes and Noble, so you can expect to hear even more patent licensing deals being announced over the next few weeks.

Curiously, no one has gone after Google for building Android except Oracle. Why? Is Microsoft scared they might get their patents invalidated, would they rather make money from licensing, are there some back room deals we’re not aware of? We desperately want to know!

[Additional reading at Ars.Technica]

  • Anonymous

    I hate MSFT the most.. They are Android Patent Tactics and Extortion.. You know why?

    MSFT don’t wanted to take them to court for patent infringement, if MSFT won the case,  they receive a million or billion dollar limit at once-lifetime after the case become acquitted .

     Thats why MSFT wanted them to pay royalists forever, & forever without receive a million or billion dollar cap at once-lifetime till android to bury.

    sorry my grammar is structure poorly…

    • Anonymous

      I think it’s far more likely the companies that signed licensing agreements were the ones who didn’t want to go to court.  If Microsoft really didn’t want to go to court, then all HTC or Samsung would have had to do was say “um, no–you want this and we go to court.”  It’s far more likley they knew that Microsoft had them dead to rights and they would owe far more than the $5-15/handset.

      And Stefan, a licensing agreement is not a kickback.  A kickback is a form of bribery, where you pay a politician after you are awarded a contract.  If you must sling mud in your leade, the term you’d probably want to use is extortion.  But then again, a licensing agreement is a legal arrangement, and extortion requires illegal payoffs, so that doesn’t really fit either.

      I guess the issue at the end of the day is that you believe Google’s hard work resulted in a free payoff for Microsoft, while both Microsoft and Apple believe that Google’s “hard work” was to copy what they had already invented.  So it wasn’t nearly as hard a job as it should have been.  And, apparently, these multi-billion dollar companies who are involved in the Android ecosystem agree as none of them are willing to risk a much larger licensing settlement if this ever went to court.

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