Ballmer: Android’s not free (because of license fees to Microsoft)

I’m sure the rookies among us will cite this as more anti-Ballmer rhetoric, but is it our fault the Big Ballmer says crazy $#!%? For instance, in an interview, Microsoft CEO Steve Ballmer claims Android isn’t free? Why? Because vendors pay Microsoft a licensing fee.

WSJ: Is that difficult in an environment where Android is free?

Mr. Ballmer: Android has a patent fee. It’s not like Android’s free. You do have to license patents. HTC’s signed a license with us and you’re going to see license fees clearly for Android as well as for Windows.

From WSJ via Business Insider

So Android isn’t free. If a vendor wants to install it on their devices, they have to pay a license fee. To whom? Google? The Open Handset Alliance? No, to Microsoft. To sell a device running Android, you have to pay Microsoft. Sounds like some crazy $#!%, but it’s closer to reality that some may realize.

For HTC, it’s already true. Microsoft got them to agree to pay a license fee on all their handsets, including those that run Android. Backed by that precedent, Microsoft is now pushing Motorola to do the same. If you understand the power of precedent in the legal world, then you know Moto, even if they weren’t dwarfed in size by MS, has little chance of resisting. I would not be surprised if, by this time next year, Samsung and LG will also be paying Microsoft to use Android.

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Furthermore, old-timers may recognize parallels between this and the rise of MS-DOS where Microsoft’s licensing structure made it cheaper to pay MS a fee for every PC sold, regardless of whether it ran MS-DOS (which was alleged to have shut out competitors). You may also recall Apple was the power to beat at the time (distracting competitors from other concerns), and rock-solid UNIX, once seen as a potential OS standard, ultimately crumbled under its own fragmentation.

For as much as I shake my head at what Ballmer doesn’t know about tech, I admit the man knows business. Microsoft is moving toward making money on every Android device sold. Bing is steadily replacing Google as the search engine on Verizon’s Android devices. It’s actually conceivable that Microsoft could pull in more revenue from Android than Google does (at least in the States), and that will be some crazy $#!% indeed.

Comments

  1. Mike says

    I don’t think there is any legal precedence created by one (or even more than one) company agreeing to pay some demanded fee.
    The precedent would only be created if a company refused to pay and was sued and the court sided with the plaintiff.

    To be honest I am not sure if there is any precedence for this or not. Where party A sues party B for not paying a license fee due to patents infringed by a product supplied to party B by party C.

    I would be interested to see any opinions by lawyers on it.

  2. Paul Harrigan says

    Mike,

    There are two different kinds of precedent being discussed in your message and Sumocat’s article.

    What you are discussing is precedent of the legal sort, in which one court makes a decision on the law because the law was decided by another court. As to this, you are right — it takes a prior court decision.

    However, what Sumocat is discussing is a different use of the same word, referring to prior conduct outside the court. It’s a legitimate term where there are prior examples of the same conduct, in this case, Microsoft seeking payment and receiving it.

    This is just the English language at its worst, with one word having two very different meanings.

  3. Dan says

    Head on over to Groklaw.net to read up on this process being used as it was first applied to Linux usage…. A word of caution, however, be careful how deep you dig. You may not like what you read, especially in terms of emails and documents that explain strategies for accomplishing this type of behavior going back several years.

    Dan

  4. lolbox says

    at first i was rather upset by this article but its really how ballmer is saying it that rubs me the wrong way (its not free because i get paid when you buy ut)but i realized this happens a lot when using components from a third party source (like htc using windows os)

    i run a company that has similar circumstances, i have an agreement with a software company that charges me for each account i have although only a portion of my accounts use their software. it was effectilvely cheaper to pay a fee for each of my accounts under a mass license agreement rather than purchase a license per account/device.

  5. vincenzo iovieno says

    hahahahahahahahahahhahahahaha. 

    Intellectual Ventures is a Venture Capitalist, it’s not a common firm, it just stores Patents from his members, One of its most important investors? Google. Now the funny part. IV owns most of android licenses. Google gave android for free to producers, like samsung htc and motorola. Then  they started production and invested millions $ in plants. So, IV rang their door and said: you have violated my patent, pay my price or dismantle everything and burn your $ invested. Checkmate, They pay their Pizzo. But who owns licenses? Google. Who will receive the pizzo? google. Samsung and htc received “an offer you can’t refuse”, and paid. Motorola had another proposal, Inadmissible. Result? IV sued motorola, an open trial, a possible veto from using android, no funding in short term and a huge loss for market stock. Hear ye hear ye.. who wants to acquire Motorola mobile? Google. Call it open source, i call it bigG. G as Godfather. My respects.

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