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7/26/2011
00:32 AM
Ed Hansberry
Ed Hansberry
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Android Legal Troubles Benefit Windows Phone

Some phone manufactures are having second thoughts about using the open source Android platform, given aggressive legal actions by Microsoft and Apple.

Android isn't having a great summer. Oh, sure, market share continues to climb and activations are nearing a bazillion a day, but that is only on the surface. Underneath, Google's manufacturing partners are taking hits from both Apple and Microsoft. The situation is causing some manufactures to consider Windows Phone 7 and, believe it or not, MeeGo, as an alternative.

Last year HTC settled with Microsoft and is paying $5 per Android handset sold. Samsung is reported to be negotiating a $10 per handset settlement. Just recently, Apple won a judgement against HTC for infringing on two patents and threatens to block HTC from bringing Android devices into the U.S.

It is enough to give anyone pause. When a manufacturer picks Android, or any open source platform, they take on the liability of any patent infringements included in the code that they use. When they buy something off of the shelf, like Windows Phone, the agreement comes with an indemnification from Microsoft, eliminating the possibility of dealing with a lawsuit.

Chinese mobile phone makers ZTE and Huawei are considering Windows Phone instead of Android, and a big reason is the possibility of a lawsuit, be it from Microsoft, Apple, or anyone else with mobile phone patents. Oracle already is suing and you should look for RIM and Nokia to jump in with both feet as well.

What is interesting is MeeGo may also benefit. Intel is aggressively looking for partners, but I don't know that the chip giant would go so far as to provide any financial backing should MeeGo get in the crosshairs of one of these lawsuits. It may be one reason Nokia backed away from the platform.

It is estimated Microsoft charges $15 per license for Windows Phone. While that is $15 more than what Google charges, the license fee is all a manufacturer would be on the hook for. With Android, you start at $0 but risk going up to $20 if current analysts projections are correct. Remember that while Microsoft may be the first to negotiate payments from manufacturers, Apple could easily be next. Other possibilities include one-time lump sum payments or even an injunction against a company from manufacturing Android handsets.

Android is no longer the slam-dunk decision it was 18-24 months ago. I'd like to be a fly on the wall in the CEO's offices of companies like Motorola, HTC, Samsung, and many of the carriers. Android has been a cash cow, but now the downside is becoming increasingly large and it is difficult to predict how bad it will get.

In the long run, Windows Phone stands the most to gain as it is the only major platform that is available for a fee that includes protection from patent infringement suits, regardless of who files them.

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