HTC Agrees to Pay Microsoft Royalties on All Android Handsets

HTC logoAt the start of March, Apple filed suit against HTC alleging the company's Android operating system handsets violated over 23 of the company's patents. And this week Microsoft deputy general counsel Horacio Gutierrez claims that Google's Android OS infringes on many patents that it holds. He says that Microsoft will try to reach licensing deals with Android handset makers, stating, "competitors do not free ride on our innovations."

The moves hardly come as a surprise. Google's operating system, led largely by HTC handsets, came out of nowhere surprising smartphone veterans Microsoft and Apple. Google is poised to pass a slumping Microsoft in smartphone market share sometime this quarter. Google and its growing Android market are viewed by many as the best alternative to Apple and its App Store.

One key difference is that Android is currently offered for free to hardware makers, significantly cutting their costs. Microsoft, charges for its operating system, and Apple refuses to license the version of OS X used on the iPhone, preferring a closed platform.

At least one Android handset maker was willing to cut a deal with Microsoft. HTC, which also makes many Windows Mobile handsets, decided to license the patents involved to avoid endangering its Windows Mobile business.

Horacio Gutierrez announced the news in a press release, stating, "HTC and Microsoft have a long history of technical and commercial collaboration, and today’s agreement is an example of how industry leaders can reach commercial arrangements that address intellectual property. We are pleased to continue our collaboration with HTC."

HTC has agreed to pay Microsoft royalties on all Android handsets it makes.

That move leads to a curious conclusion. The only person that HTC will be paying for Android OS is Microsoft (not Google!).

There may be a little more logic behind the development, though. Analysts are speculating that the licensing agreement could give HTC access to intellectual property that it could use to defend itself against Apple.

While the threats and royalty demands will likely do little to slow Google's momentum, they do help to ensure Microsoft retains a small cut of the market, in case it goes the way of Palm, seeing its smart phone market share further collapse.

Tags: Android, HTC, Microsoft, mobile phones

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