back to article Microsoft takes the Android profit, the Wonkas take the pain

Google’s troubles with Android aren’t just financial. They’re actually much, much worse than that, which all seriously throws the company’s golden reputation for perspicacity into doubt. Why buy into Google’s vision of the future when its own estimation of the present is so deeply flawed? The fact that Microsoft is reaping all …

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Bronze badge

Return of the dark warrior.

Strange that the dark gloomy days of the Microsoft tax have returned.

Now will OS/X warp run on a mobile?

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Shouldn't that be OS/2 Warp?

I'll get my coat .........

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Hmm

Google seem reasonably convinced that advertising revenue wise they're already seeing profits from Android.

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(Written by Reg staff) Silver badge

Re: Hmm

[citation needed]

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That can be calculated can't it?

Google recently stated in court that iOS represents 2/3 of their mobile search queries, we know how many iOS devices are out there, by looking at the cash Google sends to say Mozilla for Firefox searches someone could calculate roughly how much they're saving on searches from Android devices.

Not me though, can't be arsed, bet it's dwarfed by their costs at the moment though, especially given the Motorola purchase.

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Terminator

I'd really like to know how Google will profit from Android

@Tom 15

As asked before "citation"

They are spending $1 bill+ a year plus on Android and $12 bill for Motorola. Regardless of the opinions of fandroids, Oracle have them by the balls. The copyright alone is enough to fuck them. The patents are just cherries that don't matter

Google are saying they are getting over half a million Android activations a day. You cant get more stupid if you try. They are telling Oracle how much they can be sued for, if it's true MS are getting $12 per device from Samsung (it's been said to be $12-15) then thats with 3x damages $20 mill a day since the dick decided to boast (the judge is saying a lot less but Google wiped out Suns Java mobile business which was second to Symbia in market share and that was for past damages, Oracle are looking for over $1 bill per year based on current sales!) .

Look Google have spent $3-5 billion on Android, add another few Billion on patents and then add Motorola and you don't have much change from $20 billion. Add the fact that everyone else can do "an Amazon" and a lot have and it's clear they are loosing money on a large scale.

It doesn't help that they are also paying Apple to be the default search engine and the way Apple works thats probably per search, not per unit. It also doesn't help that the Oracle case is a slam dunk either. So i guess I'm asking, can you give a link to your claim that Google are making money because the way i see it, they have made a clusterfuck of biblical proportions.

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"Oracle are looking for over $1 bill per year based on current sales!) ."

Perhaps Google are banking on the fact they don't have any "sales"? Your 3x damages cost is worked out against MS licensing fees - that seems a little strange to me given it's Google being sued and they aren't selling licenses.

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>The fact that Microsoft is reaping all the profit from Android – and Google none

Yeah, Google may as well be giving it away.

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LPF

The issue with the Microsoft Patents, is that they have nothing to do with Android in itself, which is why you have not seen Microsoft try and sue google. Its the VFAT patent and sync with exchange rubbish. remove that from your phone and you can tell Microsoft to go one!

Google is making money from all the apps that get sold through its store, are they making Apple money? no but to say they are making nothing is rubbish.

As for Microsft making 500 Million, well seeing as when you sign the agreement they make you keep stum, I think that a load of balls as well!

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LPF, I totally agree

If it is just the VFAT stuff, junk it.

All you lose is the ability to move your flash memory devices from one device to another.

And enough gadgets are not run by an MS operating system for the vendors to decide with each other on another, Open Source, filesystem, properly suited to flash based devices. Put a Windows user-land (or even kernel level if you can get it signed) filesystem driver in the support disk for the device, and bye-bye VFAT and good riddance.

But I suspect that there may be other patents involved. Boy, we need this list leaked! How are MS keeping it secret? I am still hoping that somebody has the balls to stand up to MS, and allow it to be taken to court (or not, if Microsoft choose to chicken out).

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Anonymous Coward

@Peter Gathercole - Barnes&Noble

seem to be one of the companies who surprised Microsoft by managing to largely evade the standard NDA. It is a story worth following.

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"Google is making money from all the apps that get sold through its store"

Really, Apply have said they are running their store at break even. Microsoft have said they don't make any money from their store. Google with a lower cut are making money?

Creating a file system is not hard, so why don't these companies create a file system if that all they need to do? Hell a virtual fat 16 would do. I did that while at uni when asked to create a library system (not using VFAT). I don't know what these patents are but they aren't VFAT, that would be to simple to get around. I'd guess the patents haven't got anything to do with storage. Remember MS has been producing tablet versions of Windows for over 10 years and windows CE is even older.

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@Peter

I'm also interested in why some of these companies don't stand up to MS. Obviously there's the cost, but also the fact that MS would be suing some of its biggest customers - not a great way to stay in the mobile business with your new mobile OS.

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Boffin

RE: @Peter

"I'm also interested in why some of these companies don't stand up to MS...." The answer is because M$ are playing very smart and not blocking other companies from using the patented tech, just asking for a small license fee. The marks think about the cost of litigation, look at the remaining margin in their products, and decide it is simpler and cheaper to pay up. Thus, each licensee actually adds to the spread of the patented tech, making it more likely other vendors will have to use the patented tech to achieve compatibility and compete in the market, meaning more licensing opportunities for M$ to go after, perpetuating the income stream to M$. Compare this to the Apple approach, which is all about trying to kill competitors, which caused the Samsung backlash which could have really serious implications for future i-products, and suddenly you see that the old Beast is being quite clever.

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Facepalm

Seriously, I mean if they just simply "lifted" the code to reading FAT/FAT32 filesystems, it seems trivial how to solve it, just hire a new programmer to write a new one from scratch. I mean, don't they have armies of programmers working at Google?

Hell they could post a "Reward" for a replacement to be written by someone on their homepage, and make the stipulation be that the winner be released to the world as open source.

Patents were never about "it does this", they were about "how it does this exactly", there are many ways to do things, and if there isn't, then it shouldn't be able to be patented, due to being too obvious.

It seems like it should be "You got us, we lifted the code, here is our one time big fine, and the next patch update will push 'our' code in place of yours." Not this, "You used a tiny piece of our code, to give our customers better connectivity with your product, now pay us forever and until the end of time."

I mean come on Google, spend the money and write some open-source code for the code Microsoft claims is theirs, and then tell them to STFU.

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@Matt

What I was trying to get at is that, although the license fee is small compared to the litigation costs etc, they'd still be suing their own customers i.e. Samsung and HTC may use Android but they are also the manufacturers that MS would need onside to make sure their new mobile OS takes off. I think the MS lawer is probably a bit more balshy than the others (all mouth and no trousers etc) as it would seem like commercial suicide if those two joined together in saying no and MS then tried suing them - try shifting your poxy OS then.

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vfat is not the only "universal" filesystem out there. In fact, vfat was never actually designed to be one, it just got there thanks to Windows market share.

We could easily move the devices to UDF, which is actually designed for what vfat is doing right now, and is supported by all major operating systems out of the box, and is part of the Linux kernel tree, meaning Android could EASILY support it with a simple checkbox switch. Also, vfat could easily get switched off the same way by unchecking it in the same kernel configuration file. Any Linux novice could do it if they were building Android or a custom Linux kernel from source.

To be honest, there's actually no reason to support a specific Windows filesystem to make a portable device or drive usable universally.

As for patents, I tend to take Microsoft patent claims with a very heavy dose of salt. They claimed Linux itself violated 235 of their patents, but because they never actually said what the patents were or even responded to those calling them out on it, they were likely just trolling and had no such patents, or at least no valid ones they could actually take Linux developers to court with.

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Or just use UDF. It was designed for portable media and all the major operating systems use it. And Android itself could support it with a simple checkbox in the Linux kernel configuration software. It'd take Google 5 minutes to turn off vfat if they wanted.

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FAIL

Loss leader

Look it up, Andrew.

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Anonymous Coward

"Microsoft is making half a billion a year from Android"

That's bullshit. The truth is, nobody knows how much Microsoft is making from Android. The deals they've made with the vendors of Android phones are complex, involving more than just Android, and the terms are in any case confidential.

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also

The way Microsoft work they'll say "Pay us 100 mill a year for patent protection and we'll give you a discount on the MS software/components you already use". Discount will be around the cost of the patents so the patents real cost is zero. Sprinkle on an NDA and tell everyone how rich you're getting from all this.

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Thumb Down

Point of order

"The patent system is there to protect originality, particularly when backed by deep pockets"

Did Oracle invent Java?

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Paris Hilton

Re: Did Oracle invent Java?

Erm... yes, a division of Oracle formerly known as Sun Microsystems.

(PS: This is just a straight response to your presumably straight question and not an opinion).

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Paris Hilton

All your base are belong to us

Borged

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Anonymous Coward

Surely this whole view hinges on the fact that Google didn't expect it to pan out like this? Who knows how big a budget they've put aside to make Android work 'one way or the other'.

If the goal was just to slowly strangle all competing mobile platforms that could have restricted Google's reach in the future, then as long as the development costs and the Motorola buy haven't busted that budget, maybe they've succeeded. They said the right things to the manufacturers to get them on board and killing their in-house OSs so as long as they can worm their way out of the mess they've created in a way that doesn't break the bank or get manufacturers jumping ship then they will have done what they intended. Only plausible as it's Google.

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Megaphone

Google did what it had to do....

... to get to market in time to still be in with a shout and worry consequences later. I'm not saying it's right but I think they understood that with zero OS experience they had to move quickly to join the party Apple started (and forgot to invite anyone else), Google could then get a foot hold before the OS giant came along and tried to crash the party. Microsoft had the luxury of being a big player in the OS market and so could take it's time, Google need a hell for leather approach to get where it is now. I'm not even sure they care about the how they got there and how much it's going to cost in short term patent suites as long as it can serve adds to 500 millions (I have on idea of the correct figure) android phone on it's terms.

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Anonymous Coward

Google purchased the the company that created Android in 2005. That was two years before the party Apple started.

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FAIL

I'm guessing you've never bothered to write anything for Android, but it certainly has its own funkiness. It's like like you just write a Java applet and stick "ANDROID" at the top.

Not that it matters.

It's not like this lawsuit is over the syntax in the first place since that obviously cannot be copyrighted. This lawsuit is about the Dalvik virtual machine. If Android programs were coded in Klingon, Oracle would still be suing.

FAIL FAIL FAIL.

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I wonder if the main reason for Google to initiate Android was to make life difficult for Apple and to a lesser extent for Microsoft. Google makes so much profit that they can afford to cast a bunch of dollars down the gutter in order to achieve this.

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Unlikely.

G bought the company developing Android about two years before the first iPhone appeared and until that day they pre-release stuff all looked like Blackberry clones, so it looks like they were aiming at RIM's market or maybe the Symbian S60 market of the Nokia E series.

It looks like they changed tack after the surprising success of the iPhone, which is why it was 2008 before we had the first "proper" Android phone in the shape of the G1.

Google did a *much* better (and faster) job of putting a proper touch interface onto their OS than Nokia or RIM, which is to be applauded.

Of course it now looks like one of the side-effects of having moved so fast is that they've laid both themselves and their partners wide open to patent disputes - presumably by side-stepping the same processes that have bogged down RIM and Nokia.

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Gimp

I'll show you mine

The problem with this is the patent system and possibly the legal one too.

If M$ really had a patent that could be used on Android then it should have been required to show it's hand.

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Anonymous Coward

RE: I'll show you mine

Why?

It is a commonly stated point you are making re showing it's patents, but why should it? The people MS are dealing with are the ones involved, not you. Why on earth should MS (or any other patent holder) have to show *you*, an uninvolved party, something that has nothing to do with you?

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Anonymous Coward

@AC 23:26GMT - Could it be because the patents

are meant to be public knowledge so we all can avoid infringing on them ?

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re I'll show you mine

The problem with that is that *no* example of "BigCorp" will disclose anything where they gain commercial advantage from secrecy unless the law requires them to do so. IMHO discosure should mandatory in law to scupper this poisonous game of liar's poker that these companies play. However, applying NDAs to these patent agreements is currently wholly legal - unfortunately.

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I'd go a step further

and make a company liable for slander/libel if they claimed a patent was infringed without providing the referenced and publicly published patent.

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Overall though, Google doesn't really have financial troubles.

At the moment Android may have cost them money, but the alternative was to sit back and let a competitor (the fruit factory, of course) get a stranglehold on an emerging new market which could potentially have resulted in a walled-garden version of the internet which could effectively sidestep google entirely.

If I were them, I'd consider the trifling losses they face to be money well spent, given that nobody could have expected them to eclipse Apple in the smartphone market so quickly. Financially it's been a loss (thus far); strategically however it's been a massive triumph.

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WTF?

Google are getting a lot out of Android

Not directly in the form of cash, I grant you. But in a world where information is power they are collectiing lots and lots of information.

All those GPS enabled handsets provide invaluable profiling information for their principal money-making activity - marketing.

You underestimate Google at your peril.

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Googles moat

The whole reason Google decided to create Android IMHO is that they wanted to prevent other players from obstructing their business model. When they created Android world looked very different. Since the recent explosion of operating systems for mobile that now looks very unlikely. So Google spent billions, got nothing in return except helped Asian competition jump few years ahead. So now everybody else is making money from Android except Google.

+++++++++++++++++++++

http://www.creabros.fi

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Simplistic assumptions

Andrew, the article makes several simplistic assumptions: on how much Google is spending on Android; on how much Microsoft is actually making; what is at stake legally.

1) Motorola purchase aside we don't know how much Google spends on Android. Is it less than Apple spends on the Iphone OS or Microsoft on the farce that Windows mobile was?

2) As others have noted all licensing deals with Microsoft have confidentiality agreements. Given that most of the manufacturers, Motorola notable here by its absence, also make Windows mobile phones it's hard not to imagine some kind of cross subsidy here. Essentially Microsoft is trying to make up for lost licence sales to said manufacturers and stop them jumping ship "because the next version will be so much better and no, Nokia, isn't going to be privileged." Yeah, right. Symbian - gone, RIM - going down fast, Windows Mobile - only Microsoft's equally deep pockets have given this one a second chance.

3) As for indemnifying the licensees - nobody forced them to use Android. Why didn't they press Google for indemnification? Or maybe, as far as Dalvik goes they already have? Anyway I can't see HTC or Samsung really complaining about their market share. Samsung may well overtake Nokia in total sales this year something that was unimaginable a few years ago.

4) Google likes to sit things out. Just look at the Youtube vs. Viacom case. Serial copyright abuse on Youtube since day one. Oh, there'll be an agreement in time but by sitting things out Google has managed to game; disrupted it as it were. I think they picked this up from how Microsoft ran the US department of justice such a merry dance of its licensing policy and that the agreements are made between the survivors who usually divide the spoils rather than worry about right and wrong.

5) Android is good enough. Other systems are faster or use less power but Android is usable and the hardware is fantastic. How long have people put up with the inverse: either great software with shit hardware or great hardware with shit software?

6) Android isn't search. Google now has millions of potential users of premium services - e.g. Google Apps - as well as potential advertising buckets. It's also worked out how to monetise its promiscuity: let the hardware manufacturers make some money and the networks as well, with the volumes now shifting Google can live well just from the crumbs.

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(Written by Reg staff) Silver badge

Re: Simplistic assumptions

6) was the justification, for sure. But the most popular versions of Android out there will be ones with no upside for Google at all: the Amazon Fire fork, the Chinese forks, etc.

At some point you have to wonder if it isn't cheaper and more effective to do 6) via other means.

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Pint

Spot on, except that Google didn't buy Motorola Mobility for its patents. They bought it to keep MMI from going after other Android OEMs. That makes the acquisition all the more pathetic. Google is getting groin-kicked from all directions. And rightly so. Anyone who cherishes the naive notion that they are pure and "do no evil" while Apple, Microsoft and Oracle are the bad guys needs to update their thinking.

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Bronze badge

You must be a connoisseur of groin-kicking (when being kicked) yourself. :)

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Anonymous Coward

@jonoMT - Judging by the number of lawsuits

started, I'd say Google is still good and Apple (suing Samsung for producing square devices), Oracle (suing Google as a favor to Apple boss/god) and Microsoft (suing world plus dog who refuse to pay for protection) are all evil.

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Anonymous Coward

Clueless

Bat-shit Crazy Article.

Are you even remotely aware of the present? Convicted Monopolists and Collapsing Financial Institutions - they're are no business rules to play by and even if, they obviously aren't doing any good.

The US Patent system is broken; Plain and Simple.

Is the gasoline engine patented or copyrighted? Patented.

Is the Harry Potter novel patented or copyrighted? Copyrighted.

Is Software patented or copyrighted? Both - WTF?

Software was already protected by copyright long before any greedy bastard got the notion to patent it.

Do you realize what a system this broken would do to other industries?

You wouldn't be able to make a book or movie about magic and wizardry for a few hundred years because it would infringe the Harry Potter Patents; you wouldn't be able to make a book or movie that had both Vampires and Werewolves in it because it would infringe the Twilight Patents.

Former employees of Sun have admitted that some of the patents Oracle now holds were filed only as jokes on the broken patent system - and they were approved!

Micro$oft has a standing invitation from Google, Red Hat, and/or Canonical to file a real non-chicken-shit patent claim against Linux and yet they fail to do so.

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Thumb Up

You have clue!

You really should have put your name to this- it's spot on!

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Holmes

But it's a load of crock in the mix

Actually, he lost me around the point where he claimed the gasoline engine is patented. Oh, he means expiration doesn't count?

Okay, so he did get close with the bit about patent law being broken. I admit that it's laughable to remember that the original purpose of patent law was to encourage innovation.

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(Written by Reg staff) Silver badge

Re: Clueless

Oh dear.

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Facepalm

Speculation

We honestly don't know the full content of these agreements. They are fully covered under Non Disclosure Agreements. For all we know, the net money is flowing the other way as Microsoft gets licenses for other patents across their whole range of software and services and has to pay more for those on balance.

Given the history, to attempt to put a number on these agreements is plain foolishness. The analysts and tech writers know this, but do it anyway. It's all a bunch of nonsense.

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MS got nothing on Android...

if it did, it would have gone after Google. Oracle is probably more of a threat to Android.

Just because Samsung/HTC stole MS techs and incorporating into Android doesn't mean it's profiting directly from Android.

As for those manufacturers, a simple maths was done ... add MS tax to the price of device ... take profit. Share holders happy, job done.

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Facepalm

Lots of Opinion, not so many facts.

M$ still has yet to prove it in court that Linux infringes on any M$ patents. Its pretty widely regarded that this is a empty threat and bully tactic to quell interest in Linux and Android. The Linux community knows that once, M$ does go to court the facts have to be presented and Linux/Android will simply remove the offending code. Microsoft only has power while this threat is an intangible and ghostly fear.

You are also very incorrect that Google is not making money, nor has a way to monetize Android.

Google makes TONS of money off search, google maps, gmail and all their other free apps by selling AD space to their hundreds of millions of eyeballs viewing their apps and content. They are an AD company and Android is HUGELY successful in that sense, especially sense Google now OWNs and creates the OS that is on more than HALF the entire smart phone market, and it seems to only be increasing. Very few companies will do what Amazon has done and fork the OS, and if Amazon makes their version entirely incompatible with all the available apps in the Android eco-system, they risk starving their version out of existence

I also very much doubt the $ value of the settlements that MS has made with the above companies. Samsung, HTC are not idiots, they are not going to pay $10 a device to something that they could easily face in court and work around. It would also be a long slog for M$ to actually WIN in court and collect this money. How much a part of an entire phone with its thousands of patents is a jury going to consider something like 8+ character file names?

I bet a jury/judge would actually give them pennies/nickles per phone instead in an actual award.

Pluw M$ would have to do this in EU, Australia, US, UK etc and each time risks having a case go against them, and risk their patents being invalidated.

Based on past M$ FUD and lawsuit bandwagon behavior, I am certain that the settlements process has been going more like this:

1.) M$ sues Samsung and publicly asks for $10-15 a device in their suit.

2.) Samsung plans to fight, but agrees to hear M$ out on settlement talks.

3.) M$ explains how for less than $1-2 a device they can:

A) make this current problem go away and get nice with M$,

B) not risk future unknown problems and

C) be in on the ground floor, and have their competitors more likely to pay higher rates down the

road and thus be less competitive.

M$ and Samsung sign agreement to NEVER speak publicly of how low the settlement is, then once there are enough companies on board, and enough news stories (claiming higher settlement amounts), M$ can really go after the last people to get on the bandwagon and charge them more money. M$ is already winning just by the fear campaign, and the licensing revenue (even at Goldmans $3-6 rate) is a drop in the bucket to their current revenues. Even if M$ settles with the last holdouts for similar low rates (early adopters will never know better due to silence of agreements) they still scratch out a small profit of the competition, and win-win.

I really doubt that M$ will have big win with their new OS, as your article even states, the product is described as being "like a mud-coated crocodile lying in wait at the water’s edge as the thirsty baby gazelle draws closer," Who in the world is going to pay for that when Android is out there?

I think if anything M$ is making Android stronger, but giving licensing and authorization to it. Sure Android wont be "free" anymore, but let Apple, MPAA, IBM, etc all get their TINY cut and your still looking a OS for your devices that costs less than $10-$20 a device AND has licensing spelled out for all the greatest and necessary proprietary technologies.

Really failing to disclose these patents is even hurting M$ worse, and they could risk another suit for anti-competitive behavior, or even lose the validity of the patents. Once in court, MS tries their same tricks (like they did with the monopoly suit) and will get caught by the facts in their underhanded tactics.

That said, Google is no better. I would love to see RedHat, Canonical or some other Linux friendly company take Android and fork it into a truely open Linux os for mobile devices, perhaps the LIMO/Megoo merger will pull this off successfully?

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