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| Samsung Paid Microsoft Over $1 Billion in Android Patent Royalties in 2013 Posted: 05 Oct 2014 07:39 PM PDT Entertainment and Devices Division's 2013 operating income pales in comparisonA couple of months back, Microsoft instituted legal proceedings against Samsung for its refusal to fulfill "substantial" obligations under a 2011 agreement that allows the latter to use patented technology in its Android devices in exchange for annual royalty payments. But with virtually all vital facts and figures contained in Microsoft's complaint being redacted from public view, we could do little more than take wild guesses at the money involved. Not anymore. Microsoft's complaint was unsealed Friday and, as a result, we now have a much better idea of just what is at stake. For instance, we now know that the deal is meant to last seven (fiscal) years in all, and that the fiscal year (FY) 2 royalty payment that Samsung made late last year (albeit reluctantly and over a month late) was in excess of $1 billion. We also know that Microsoft wants Samsung to cough up over $6.9 million in late payment interest that it says is contractually its due. Of course, as we reported back in August, Microsoft believes Samsung's refusal to pay this amount stems from its belief that the Redmond-based software giant's acquisition of Nokia's handset business breaches the patent license agreement. Just to put things in perspective, the FY2 royalty payment Samsung made last year was well more than the $848 million operating income Microsoft's entire Entertainment and Devices Division — includes Xbox, Skype and Windows Phone — generated in 2013. What's more interesting is that the said amount is over half of the $2 billion per year in revenue that Microsoft was estimated to be making from all such patent royalty deals — the company has such agreements with over 80 percent of Android vendors — back in 2013. Frankly, this is hardly a surprise when one considers Samsung's utter dominance of the Android device market. Follow Pulkit on Google+ |
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