Microsoft announced that they signed a worldwide patent licensing agreement with Hon Hai Precision Industry, the parent company of Foxconn. Foxconn is known to manufacture many gadgets and devices like smartphones, tablets, notebooks or game consoles such as the Xbox 360.
Under the IP licensing program targeting Android and Chrome OS, Microsoft wants to make sure that their technologies are properly licensed when used in products based on open source software. While the exact details of the agreement are not disclosed, Microsoft collects royalties on a per device basis. Given the high sales numbers of Android devices, this rakes in a considerable amount of money.
Microsoft’s Horacio Gutierrez, corporate vice president and deputy general counsel of the Intellectual Property Group, makes it clear that they want to broaden the coverage of their program by targeting ODMs like Foxconn: ?By licensing both brand name companies and their contract manufacturers, we have successfully increased the overall effectiveness and global reach of the program.?
The win of an agreement with Foxconn is a significant success for Microsoft given their high number of devices manufactured. Foxconn itself holds more than 54,000 patents and thus acknowledges their importance. Microsoft themselves state that they invest considerable sums in licensing technologies from other companies and thus only find it fair to get properly paid for their IP.
Other companies who signed such agreements with Microsoft include other OEMs like Compal, Pegatron or Quanta as well as OEMs such as Acer, Barnes and Noble, HTC, LG and Samsung.
What is not publicly known is the amount of royalties Microsoft collects per device, as the agreements involve non-disclosure clauses. Back in 2011, when Samsung joined the fray, industry sources estimated it to be to the tune of $10 to $15 per device. In 2012 those royalties earned Microsoft almost $1 billion in revenues, according to estimates. The company doesn’t break it out in detail in their financial reports.
