UPDATED 06:20 EST / APRIL 24 2013

NEWS

Microsoft Wraps Up Android Patents Deal With ZTE

Microsoft has just tied up its second major patent-licensing deal in the space of seven days, sealing an agreement with Chinese smartphone maker ZTE that shows it isn’t about to let up in its efforts to seize its share of the mobile market, even if it has to do things the roundabout way.

As noted on its Technet blog, the firm has now tied up licensing deals for its patents with all but two of the world’s major Android makers, with only Huawei and Motorola Mobility still refusing to pay their dues. The deal with ZTE follows last week’s milestone agreement with Foxconn, the Taiwanese firm which makes something like 40% of all the world’s consumer electronics.

Today’s deal grants ZTE a license to use patents within Microsoft’s portfolio for a range of phones, tablets, PCs and other devices that use either the Android or Chrome OS. Considering the size of China’s mobile market, which is generally agreed to be the largest in the world with over one billion mobile phones registered, getting ZTE to comply is undoubtedly big deal for Microsoft. Research firm iSuppli ranks ZTE as the fourth largest smartphone maker in the world in terms of devices sold, and the vast majority of these run on Android. Notably, the Chinese firm is also an enthusiastic patent-grabber in its own right, reportedly filing more patents than any other company during 2012, according to BusinessWire.

But getting ZTE to play ball isn’t just about gaining a foothold in China’s mobile market. As Microsoft notes, with ZTE onboard a full 80% of all Android phones sold in the US now pay royalties to the software maker. Microsoft ultimately wants paying for the whole lot of course, but Google’s Motorola is refusing to give in, choosing to fight its rival in the courts instead. The other major Chinese player, Huawei, also remains a problem – talks have been ongoing for the last year-and-a-half, with no deal in sight yet.

Horacio Gutierrez, Microsoft’s deputy general counsel of legal affairs, addressed these two hold outs in a statement:

“We have worked for multiple years to reach an amicable solution with the few global companies who have yet to take a licence, but so far they have been unwilling to address these issues in a fair manner. We’d prefer to consider these companies licensing partners and remain hopeful they can join the rest of the industry in the near future.”

If we’re going to be truthful here, Microsoft’s patent strategy probably isn’t winning it too many friends, but few can deny that it’s certainly good business from their point of view. The software maker’s attempts to overhaul Android with the Windows Phone platform haven’t yet paid off, and so generating a tidy revenue stream from its rival while it works to develop that is a clearly a smart move on its part.


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