Microsoft (NASDAQ:MSFT) has signed a patent licensing agreement with yet another Android device manufacturer — Compal Electronics. [1] This is another huge victory for Microsoft after signing licensing agreements with Samsung, HTC and Quanta (the maker of the Kindle Fire). Compal is one of the largest smartphone and tablet manufacturers with $12 billion in revenues last year. Microsoft’s Windows Phone platform competes with Google‘s (NASDAQ:GOOG) Android and Apple‘s (NASDAQ:AAPL) iOS in the rapidly expanding smartphone market.
We currently have a $32 Trefis price estimate for Microsoft, which stands nearly 15% above its current market price.
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Microsoft Now Has Deals with a Majority of Android Smartphone & Tablet Manufacturers
Compal will pay a licensing fee to Microsoft for every smartphone, tablet or e-reader running Android or Chrome OS. Microsoft now has licensing agreements with manufacturers covering 53% of all Android smartphone units in the U.S. It recently sued Motorola for patent infringement, following its refusal to enter a licensing agreement. It has also entered licensing agreements with more than 50% of ODMs (original design manufacturers) which manufacture devices for third parties.
Microsoft is on track to generate more than a billion dollars in revenue from Android patent licensing in 2012, according to our estimates. Android has been strengthening its grip on the market and Microsoft now has licensing deals with all major Android manufacturers. We expect it to make more money from Android patent licensing than from its own Windows Phone platform, at least for the near future.
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Notes:- Microsoft’s New Patent Agreement with Compal, Technet [↩]
