Sunday, July 10, 2011

Microsoft's Monumental Android-Milking, Money-Making Machine

Posted by vishnu vardhan reddy boda at 9:10 AM

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It's "not a nice business model," said Slashdot blogger Chris Travers. "Microsoft can't win over the long run. ... "A few patents will stick," but then "the community will work around them quickly to produce a version unaffected by the patents in question. So in the end, Microsoft's license fees end up being very short-term, and damage to their patent portfolio rather substantial."

Say what you will about Microsoft (Nasdaq: MSFT) and its products, but you have to admit the company has a particular skill at making money.
Take Android, for example. Instead of using the wildly successful mobile platform as an example and a model for its own lackluster efforts in that arena, Redmond has apparently opted instead to make its competitor a friend -- a money-making friend, that is.
Yes, Android has turned into quite the little cash cow for Microsoft of late, enabling the software giant to collect licensing fees right and left for what it says are related patent infringements. The latest victim, of course, appears to be Samsung; most recently before that it was General Dynamics' Itronix division and Taiwanese manufacturer Wistron.
Here in the Linux blogosphere, most don't look too kindly upon efforts like this, particularly when the victim is a close member of the family. Microsoft may want a piece of Android, but many in the Linux community would like to give Microsoft a piece of their mind.

'Like Organic Waste and Stink'

"If you can't compete, just tax people who succeed more than you do," consultant and Slashdot blogger Gerhard Mack mused. "This is a sure sign that Microsoft has lost its ability to dominate new markets."
Similarly, "M$ and software patents go together like organic waste and stink," blogger Robert Pogson agreed. "M$ spends $millions finding innovative ways to kill competition, and software patents are just one of many techniques they have used."
And again: "It must be the silly season," opined Barbara Hudson, a blogger on Slashdot who goes by "Tom" on the site.

'The FUD Value Outweighs Any Real Value'

"For IDC [analyst Al Hilwa] to say, 'By definition, Microsoft's assertion of patent rights over Android has legs because some people are paying licensing fees,' misses the point," Hudson asserted. "To date, Microsoft's claims are just that: claims. I could just as easily say, 'by definition, Microsoft's assertion of patent rights over Android has no legs because MANY are refusing to pay licensing fees.'"
Indeed, "I notice that many Android-using OEMs have not signed up," Pogson agreed. Not only that, but "M$ has not sued Google (Nasdaq: GOOG) but filed an anti-trust complaint over search, something unrelated."
It all boils down to FUD, Hudson said.
Microsoft "continues to refuse to specify which patents" Android violates, she pointed out, "probably because most of them are easily overthrown or trivial to work around.
"Microsoft is going to have to name them in court, and the only reason that hasn't happened yet is because the FUD value outweighs any real value the patents have," she added. "If they were show-stopper linux-killers, you can be sure that Microsoft would have used them a decade ago."

'Microsoft Can't Win'

It's "not a nice business model," Chris Travers, a Slashdot blogger who works on the LedgerSMB project, told Linux Girl. "Microsoft can't win over the long run."
In fact, one of three things will likely happen to every patent it brings out, Travers suggested.
"A very large minority will probably be fully invalidated," Travers predicted. "In a recent court opinion, the court noted that over 40 percent of patents that are litigated are found to be invalid."
As a result, such litigation is expected to be "extremely costly to Microsoft in terms of loss to their patent portfolio," Travers noted. "It also means that a large number of the asserted patents will be found to have no effect at all and we can ignore them."

'Damage to Their Patent Portfolio'

The rest of the patents "will be narrowed by the court," he predicted. "In many cases, these will be found to be irrelevant to Android and Linux, in which case Microsoft doesn't lose the patent but still loses that count in the case."
It's possible that "a few patents will stick," but then "the community will work around them quickly to produce a version unaffected by the patents in question," Travers said. "So in the end, Microsoft's license fees end up being very short-term, and damage to their patent portfolio rather substantial."
In the end, then, "this is not a net win for Microsoft on this level," he concluded. "I don't think the goal can reasonably be to monetize Android; rather, I think they are taking an opportunity to try to pressure vendors into offering Windows Phone instead. Not that I think it will work."

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