How Microsoft makes money from Android

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Many of united states of america oftentimes wonder how Microsoft makes coin from Android OS. The revenue probabilities point towards the products that Microsoft creates for Androids. But and then, aren't they freemium goods? I mean, Word for Android or Office for Android and things like that are available for costless to Android users, and at that place is no subscription, etc. plans that might signal towards Microsoft making money out of such products.

How Microsoft makes money from Android

While it is truthful that Ballmer had pointed out that freemium products volition assistance Microsoft earn in the longer term, they alone cannot be the source of revenue Microsoft earns from Android OS.

Nosotros besides had carried an article where we explained how freemium products raise revenue for Microsoft. They do provide a bit of revenue, only it is not the consummate moving picture.

It is estimated that Microsoft earns anything between $v and $15 for every new Android device sold in the cellphone market place. Samsung has paid effectually $ane billion to Microsoft in the terminal few years for shipping and selling new phones running Android. Thus, the major source of revenue for Microsoft from Android is not freemium products. Then what is the source?

According to BBC and a few other sources, Microsoft charges "patent usage fee" from telephone and tablet manufacturers that run Android. You might wonder how that is and what patents does Microsoft charges for because Android is considered more of Google. There are many things to exist considered in this respect.

1 of the examples provided is the Fatty file system on Android phones. The FAT file organisation was developed past Microsoft back in the days when it used to industry MS-DOS. The FAT file system allowed for longer file names (up to 255 characters long). Before the FAT32 system, filenames were allowed only to be eight characters long. FAT is a file storage system that allows longer filenames that the operating system would shorten and store in astern compatibility form. Before FAT, spaces were not immune in filenames. With Fat, filenames like My Documents are stored equally My%20Doc~1 that satisfy the requirement of filename having only eight characters long. Since Android employs the system to store files and folder names, Microsoft charges a patent fee from device manufacturers.

The FAT file organization is just one of the Microsoft inventions that Android employs. At that place are many other such pocket-sized things that – though can be overlooked – require permission from Microsoft. It is non articulate if most of such inventions were even patented by Microsoft legally.

Some say that Microsoft cannot win a legal boxing over patent fees if the issue is taken to court. Only the amount of money a device manufacturer would have to spend on legal battle would be much higher than agreeing to pay the patent fee. Thus, the device manufacturers sign a non-disclosure agreement for patent usage. It is not clear how much each device manufacturer pays to Microsoft towards patent usage fees as Microsoft does not declare it separately in its residual sheets. It includes the amount in the sectors that are running in losses – such as Xbox and Skype – and covers the losses thus.

BBC reports that Microsoft received nearly i billion dollars from Samsung to employ the old's technologies in Google's Android. The amount was a secret until Samsung refused to pay the patent fee after Microsoft's conquering of Nokia – saying that it will be using the engineering used in Nokia and hence would not exist liable to pay anything to Microsoft.

Likewise Samsung, there are other companies like HTC, LG, Acer, and Celkon that use Android OS on their handsets. There are all the same smaller companies – local to their countries and Microsoft does not leave its share anywhere.

I promise this answers the question of how Microsoft makes money from Android. It is not just freemium products. In fact, freemium products are just a small percentage. The major income for Microsoft is the patent license agreements between Microsoft and cellphone manufacturers.

Arun Kumar is a Microsoft MVP alumnus, obsessed with engineering science, particularly the Net. He deals with the multimedia content needs of grooming and corporate houses. Follow him on Twitter @PowercutIN