Microsoft Bags More Licensing Deals With Android Device Makers

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Microsoft (NASDAQ:MSFT) has signed a patent licensing deal with two more Android device manufacturers, Coby Electronics and Aluratek. While these may not be as high-profile as Microsoft’s other deals, they do add to the company’s bottom-line by generating licensing revenue. Microsoft now covers four of the top five original device manufacturers (ODMs) and most of the top Android device manufacturers, which account for more than 70% of all Android devices sold in the U.S. The exact licensing fee hasn’t been revealed yet, but it could be around $5-$10 per Android/Chrome device shipped by both manufacturers. Microsoft competes with Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) in the smartphone space. [1] [2]

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Motorola is now the only major smartphone manufacturer that hasn’t signed a patent licensing deal with Microsoft. And with Google acquiring Motorola, it is unlikely that it will give up without a fight. Microsoft and Motorola are involved in a series of lawsuits, but they may enter some cross-licensing deal eventually.

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Ironically, given the little traction that the Windows Phone has received, Microsoft will likely make more money from Android than it ever will from the Windows Phone. It stands to generate billions of dollars in revenue from Android patent licensing in coming years, given that Android is a top smartphone platform, selling hundreds of millions of devices each year.

However, we don’t expect these deals to impact Microsoft’s value significantly. We have a $40 Trefis price estimate for Microsoft, which stands nearly 30% above its current market price.

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Notes:
  1. Microsoft and Aluratek Inc. Sign Patent Agreement Covering Android and Chrome Based Devices, Microsoft []
  2. Microsoft and Coby Electronics Sign Patent Agreement Covering Android and Chrome Based Devices, Microsoft []