Google's free-to-use operating system is increasingly imposing costs on handset developers.
That's because Android vendors have of late become targets of both Microsoft and Apple, which just happen to be the companies with the largest market caps on the Nasdaq stock exchange and have plenty of money to spend on intellectual property lawsuits. The most recent development in this saga came last week when a judge at the International Trade Commission ruled that HTC's Android-based smartphones had key features that infringed upon two Apple patents. If the ruling is made final later this year, it means that HTC could be barred from importing its Android phones into the U.S.
But presuming the Taiwanese handset manufacturer still wants to sell its devices here, the company will likely seek a licensing agreement with Apple if it loses its appeals to have the initial judgment overturned. HTC already entered into a licensing agreement with Microsoft last year that, according to a report by Citi analyst Walter Pritchard, essentially sends Microsoft $5 every time HTC ships an Android-based device. Asymco analyst Horace Dediu has estimated that Microsoft is now generating $150 million in revenue just from shipments of Android phones, or more than five times the estimated revenue Microsoft has made from selling Windows Phone licenses.
If both Apple and Microsoft are successful in extracting licensing fees from HTC for its Android devices, other Android vendors, such as Motorola and Samsung, could soon fall in line. Indeed, Microsoft is already pressing suit against Motorola over its Android devices for violating a host of patents, including one that allows applications to "issue commands without needing knowledge of the cellular network's underlying radio structure" and one that revolves around managing user contact databases.