Microsoft may make more from HTC Android phones than Windows Phone 7

Microsoft is apparently making more money from Android phones than from its own Windows Phone 7 software, thanks to a money-spinning patent deal with HTC.

Richard Trenholm Former Movie and TV Senior Editor
Richard Trenholm was CNET's film and TV editor, covering the big screen, small screen and streaming. A member of the Film Critic's Circle, he's covered technology and culture from London's tech scene to Europe's refugee camps to the Sundance film festival.
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Richard Trenholm
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Microsoft is thought to make more money from phones that run Android than from handsets running its own Windows Phone 7 software. That's thanks to a money-spinning patent deal that apparently sees HTC pay Microsoft $5 for every Android phone it sells -- and Microsoft is chasing similar payments from other Android manufacturers.

A deal signed in April 2010 between HTC and Microsoft means that hardware manufacturer HTC can use technology patented by software company Microsoft in exchange for regular payments -- but neither company will comment on which technology is involved, or how much the royalties are.

Citi financial analyst Walter Pritchard claims that HTC is forking over five bucks -- about £3 -- for every Android phone it sells. The Guardian reports that Microsoft is chasing similar deals in legal battles with other manufacturers of Android devices, with Gates' mates wanting between $7.50 (£4.55) and $12.50 (£7.59) for every Android device sold.

We're no mathletes, but that must add up to a hefty chunk of change as Android vies with Apple over the lion's share of the smart-phone market.

Windows Phone 7 isn't used by anywhere near the same number of phones as Android. That may change when Nokia starts making phones that use Windows Phone 7, but, in the meantime, Microsoft could be making as much as five times more from Android.

So what could the technology be? If it's in the Android software itself, Microsoft could pursue Google instead of HTC -- but Google could just change the code, and probably has more resources to fight a legal battle.

As crazy as it sounds, this sort of thing happens all the time in the zany world of technology. Many companies have deals in place with other companies to sell each other components or use each other's technology -- even when they appear to be rivals to the outside world. The similarities between many technologies mean that companies are often suing each other. For example, Apple is currently locked in a legal battle with Samsung, claiming that Samsung's phones and tablets mimic the iPhone and iPad too closely.