Microsoft makes almost as much money licensing patents to HTC, Samsung and other companies as it does selling Windows Phone 7 devices.
Yes, you read that right, Microsoft makes almost as much from Android sales as they do through sales of their own Windows Phone devices. That’s more than Google makes from the Android, which the company gives away to manufacturers. It is worth noting that Android users generate ad revenue for Google, which could add up to $1.3 billion in 2012.
Goldman Sachs estimates Microsoft will make $444 million annually from Android patent settlements for the current fiscal year. This is just slightly less than the estimated $600 million that Microsoft makes annually from the Windows Phone business.
Goldman Sachs pegs Microsoft’s earnings per Android sold at $3 to $6 per device. For comparison, Microsoft is estimated to take in about $15 per Windows Phone 7 device sold by HTC. This comes from settlements with Samsung and from a settlement with HTC made earlier this year, and match up with those from a Citi analyst earlier this year. Estimates suggest that over this same period, Google will earn about $10 per Android users in the form of ad revenue.
As Business Insider points out, this $444 million is a drop in the bucket, when you compare it to the estimated $75 billion in revenue for the same fiscal year. Unfortunately for Microsoft, patent settlements aren’t adding to the bottom line, and they aren’t slowing down Android either.
Nielsen’s analysis of smartphone purchases in the last 3 months showed that Android took 56% of the purchases, iPhone had 28% and RIM had 9%. Microsoft’s Windows Phone 7 didn’t even make the list, aside from being lumped into 6% of other smartphone purchases.
Despite dire beginnings, Windows Phone 7 has a chance at coming back in 2012. Windows Phone 7.5, better known as Windows Phone Mango, has been released and will being many improvements to the Windows Phone devices. If we can get a helping of high end Windows Phone 7 devices with 4G LTE in early 2012, Microsoft might be able to get out of this slump.