Microsoft Acquires $150M Kickback from Android Sales

Android smartphone sales are considerably stronger than those for Windows Phone 7 -- but does it spell disaster for Microsoft?

Perhaps not. A new report shows that the skyrocketing Android sales are a blessing in disguise for Microsoft, with projected figures indicating that the Redmond-based software giant is actually making more money off Android than they are with Windows Phone 7.

Microsoft Gets $5 for Every HTC Android Sold

Citi analyst Walter Pritchard revealed that Microsoft gets five times more money from Android than it does from Windows Phone 7 due to an intellectual property (IP) infringement case raised against HTC. The terms of the settlement resulting from the case call for HTC to pay $5 to Microsoft for every Android device sold.

The court decision does more than just bring Microsoft additional income; it also cuts into HTC profits.

30 Million Androids Sold to Date

HTC has sold over 30 million Android smartphones to date, with Microsoft raking in $150 million as per the ruling.

In comparison, Microsoft has sold 2 million Windows Phone 7 licenses at an estimated cost of $15 per license. The company only made $30 million as a result; one-fifth of the earnings received from HTC Android sales. (Source: venturebeat.com)

There's no doubt that Microsoft is taking their profits from HTC Android sales and reinvesting it into advertising and development efforts for Android rival, Windows Phone 7.

Other Android Manufacturers Targeted

Analysts have indicated that HTC is the first in a list of other potential targets set for litigation battles with Microsoft.

The company has sued other makers of Android devices, which Citi believes will eventually see Microsoft taking in anywhere between $7.50 and $12.50 per device. (Source: pcworld.com)

So while cutting into the profit margin of Android manufacturers is not a sound business strategy for Microsoft, the company is probably better off conceding defeat in the mobile marketplace -- at least for the time being.