While Windows Phone is still struggling to make its inroads into the league of leading smart phone platforms, Microsoft Inc. is earning a good amount of money through the rival platform Android, if a recent new report is to be believed.
According to the latest note by blogger and analyst Rick Sherlund who is currently working with the firm Nomura, Microsoft Inc. is generating a good amount of around $2 billion per year in revenue from Android patent royalties, as it was noted by Business Insider.
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Rick Sherlund believes that the Android revenue has a 95 percent of margin area, a huge chunk of the profit. He also adds that the money helps in masking the cash Microsoft is burning on their gaming console Xbox and their Windows Phone products as the company has reported, the Android royalty payments under the revenue and an operating losses of Entertainment and Devices segment which includes Xbox and also, Windows Phone. If the particular Android royalty gets removed from this segment, it might reflect losses on account of Xbox, Skype, and also, Windows Phones.
It is worth pointing out that, Microsoft Inc. has signed a patent deal with Android OEMS like tech giants LG, Samsung, Acer, and HTC for their Android and Google Chrome OS-based products. Vendors who signs deal with the Redmond giant has to pay an undisclosed licensing fee for using their patents, as Android OS and Chrome OS allegedly infringe on them.
According to Microsoft Inc., 80 percent of Android smart phones sold in the United States and most devices sold throughout the world are now covered under their various agreements.
Some estimates also suggest that, Microsoft Inc. could very well be earning anywhere between $1 to $8 per Android device. According to the Gartner, Microsoft Inc. could easily generate about $430 million in the year 2013 from these royalties. But this would most probably be a conservative estimate compared to the analyst's prediction. So, the $1-$8 toll per Android device looks more like it even if half of all those Android devices shipped are included.