by Jay Greene
With allegations that Google infringed on several patents in its Android operating system, two of the biggest beneficiaries of sales of mobile devices that use the technology could well be Oracle and Microsoft.
Both companies are seeking as much as a $20 licensing fee per device from handset makers that choose to use Android. That'd be roughly double the amount that Google makes in search revenue, on average, from every Android device, according to Deutsche Bank analyst Jonathan Goldberg. Google gives away the Android operating system in hopes of generating that revenue.
Goldberg learned of Oracle's bid to get licensing fees over alleged Java patent infringement in Android by chatting with "various handset makers," he said. He declined to name them, except to say that "I think they are approaching everyone who has Android OS or apps."
Goldberg added that Oracle was seeking $15 to $20 per Android device as part of an early adopters program that would, in theory, indemnify those companies in the event that Oracle wins its patent infringement lawsuit against Google, filed last August.
"As far as I know, no one has signed up for this program," Goldberg said. "They are, and I am too, particularly impressed with Oracle's spirit."
Oracle did not respond to a call and e-mail. A Google spokeswoman declined to comment on the claims, except to repeat an earlier statement that "Oracle's 'methodology' for calculating damages is based on fundamental legal errors and improperly inflates their estimates." (For a great primer on Oracle's fight with Google, readthis article by my colleague, Stephen Shankland, from last summer.)
Meanwhile, Microsoft too continues to eke more money from Android device makers. Last year, the software giant convinced its longtime handset partner, HTC, to license Microsoft's patents to use in its Android devices. Citi analyst Walter Pritchard estimates that HTC is paying Microsoft $5 per device.
In the last few weeks, Microsoft inked four more licensing deals with Android device makers, albeit much smaller ones than HTC. It's also sued two other giant Android device makers--Motorola and Barnes & Noble--which wouldn't capitulate to Microsoft terms.
Microsoft is reportedly ratcheting up the pressure on one of the biggest Android handset makers yet, Samsung, which also makes handsets that run Microsoft's Windows Phone 7 software. Earlier this week, South Korea's Maeil Business Newspaper reported that Microsoft has demanded that Samsung pay a $15 per device fee. Microsoft also declined to comment beyond what it's already said about Android.
Of course, there are differences between the strategies of Oracle and Microsoft. Oracle, which acquired the Java patents that it claims Google is infringing when it bought Sun last year, is merely looking to tap that patent portfolio for more income.
"They see this as a revenue stream," Goldberg said. "They want to see Android do well and make millions off it."
While Microsoft is happy enough to skim money from each Android sale, it's really trying to create uncertainty among device makers in order to better position Windows Phone 7. For more than a year, Microsoft has argued that Android isn't really free. Clearly, one of the costs, Microsoft believes, are patent licensing fees.
That uncertainty may give device makers pause as they consider creating new devices that run Android. At the very least, they might stop to calculate the potential cost of using the mobile operating system. And now, Microsoft has a new ally in that battle in Oracle.