Android’s Success is Microsoft's Future?

Android is the leading smartphone platform in the world with over 500,000 device activations every day. It is one of Googles most successful businesses helping Google capture mobile search market share and revenues that will top $1.3 billion in 2012. 

Microsoft owns several patents relating to Android technology and so Android’s success is quickly becoming a boon for Microsoft, which has established licensing agreements with several Android manufacturers to settle patent infringement claims. After landing several key licensing agreements and with a big Samsung agreement reportedly in the works, Android is well on its way to becoming one of Microsoft’s fastest growing money makers. Google’s Android OS competes mainly with the Apple iOS, Microsoft’s Windows Phone 7 and Research in Motion’s Blackberry OS in the smartphone operating system market. 

Since Microsoft has the rights to several patents related to technology used in Android, it has been able to turn Android into a huge revenue generating business by entering into patent licensing agreements with other companies which produce Android devices. Microsoft recently entered a patent licensing agreements with several manufacturers including HTC, General Dynamics, Wistron and Onkyo under which they will pay it $5-$10 for every Android device that they ship. With 500,000 devices a day, this implies around $1 billion in value if it received a $5 fee for each Android device. Current negotiations with Samsung, the top Android device manufacturer, could land Microsoft an additional $10-$15 for every Android device activated by Samsung. All these patent agreements could generate revenues well in excess of $1 billion for Microsoft by the end of 2012. 

Currently, Microsoft Office and the Windows operating system are the most valuable segments for Microsoft; however, Android could turn out to be its next billion dollar business and one of its largest revenue generators – surpassing the value of its own Windows 7 platform and perhaps Bing in the not too distant future.

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