Microsoft has just signed a major patent licensing deal with Foxconn, the Taiwanese firm that makes 40 percent of the world's smartphones. Microsoft will get a small fee for every Android- or Chrome-based device Foxconn makes.
TechCrunch's Victoria Ho reported, "Microsoft just scored a coup on the patent royalty front, with a new deal with Taiwanese phone maker, Hon Hai, which owns Foxconn. Under the terms of the deal, Microsoft will get paid a flat fee per Android and Chrome-based device that Foxconn makes. And there are a lot of those. A whopping 40 percent of the world’s phones come from the firm’s China-based factories. Foxconn is an ODM, or 'original design manufacturer,' and makes Android devices for clients like Acer and Amazon (it makes the Kindle Fire)."
Ars Technica's Joe Mullin noted, "The Redmond software giant has insisted for years now that any company making Android phones needs to license its patents. That campaign has generally been successful; so successful, in fact, that by 2011 Microsoft was making more money from patent licensing than from its own mobile phone system. Now, Microsoft says that more than 50 percent of the Android phones in the world come from companies that have agreed to take licenses to its patents, including smartphone makers like LG, HTC, and Samsung."
The Verge's Sam Byford added, "While Microsoft already has similar deals with several OEMs such as Acer that use Foxconn for manufacturing, the company will reportedly only collect fees once per device; both licensees will work out who pays the fee as part of their contract."
MarketWatch's Benjamin Pimentel wrote that the deal is "bad news for Google." He quoted Sterne Agee analyst Shaw Wu, who said, "It increases the cost of Android phones. Microsoft has taken a more aggressive stance."