Microsoft has had some relative success so far in enforcing various patents it holds to reach licensing agreements with Android device manufacturers. And, Microsoft is really just getting started. There are more manufacturers to target, and the combination of Microsoft intellectual property, Nokia patents, and the pool of patents recently acquired from Nortel, Microsoft could tie up Android device makers in legal battles for years to come.
The patent war is a win-win for Microsoft. As a result of patent licensing agreements already in place, Microsoft made an estimated $150 million from Android devices–five times the profit generated from its own Windows Phone 7 platform. Microsoft’s proposed licensing agreement with Samsung could net another $285 million. Essentially, Microsoft benefits significantly from the success and popularity of Android.
Of course, part of that success and popularity is driven by the fact that Android is an open source mobile OS that manufacturers don’t have to pay licensing fees for. If the patent licensing agreements eclipse the cost of licensing Windows Phone 7, Android may not be as appealing, and vendors may turn to using Windows Phone 7.
While that makes sense as a win-win for Microsoft, it also seems like extortion on some level–like Microsoft will punish vendors for using Android to drive them to embrace Windows Phone 7. Smells like the making of an antitrust suit of some sort.