ballmerandroidWindows Phone revenue rose by $1.2 billion in the company’s 2013 fiscal year, according to new numbers released by Microsoft this afternoon as part of its Form 10-K filing with the Securities and Exchange Commission. But the definition of “Windows Phone revenue” isn’t what you might think.

The number reflects “an increase in patent licensing revenue and sales of Windows Phone licenses,” the filing says.

In other words, an unspecified chunk of that revenue is coming not from Windows Phone, but from patent licensing deals that Microsoft has struck with companies that make phones based on Google’s Android operating system.

Those deals include a licensing agreement with Samsung, which has been dominating the smartphone market with skyrocketing sales of Android-based devices.

So how much is Microsoft making on Android patent deals? The company isn’t saying, but here’s some back-of-the-napkin math, with some help from my spreadsheet of sales stats.

Microsoft hasn’t disclosed the number of Windows Phone units shipped during the year, but based on IDC’s past reports and Nokia’s public reports of Lumia sales, my estimate is that there were somewhere around 26 million total Windows Phone units shipped during Microsoft’s fiscal 2013, which ended in June.  This is a rough estimate based on the typical ratio of Lumia units to the overall Windows Phone market.

(Nokia reported 20.3 million Lumia shipments over the last four quarters, and on average Lumia represents around 77 percent of the Windows Phone market.)

Analysts have estimated in the past Microsoft is getting roughly $15 in licensing fees for each Windows Phone unit. If true, those 26 million units would translate into less than $400 million in actual revenue from Windows Phone during the fiscal year.

Going back to the $1.2 billion figure reported by Microsoft, keep in mind that it’s an increase over an unspecified number, so the total revenue figure from Windows Phone and patent licenses is actually higher.

Yes, these are all estimates, and we won’t know for sure unless Microsoft releases the actual numbers, but it’s quite possible that Android has become Microsoft’s latest billion-dollar business. And if not yet, then soon.

PreviouslyMicrosoft Surface revenue so far: $853 million

Comments

  • Ryan Parrish

    Technically these aren’t Android patents, rather patents that Android violates, and Google leaves their partners to fend for themselves on liability.

    • http://geekwire.com Todd Bishop

      Thanks, Ryan. You’re right — the headline is shorthanded a bit. The revenue is from patent licensing deals with makers of Android devices, which Microsoft claims violates its patents.

      • SilverSee

        And the makers of Android devices appear to agree with them, hence the license payments.

        • Charlie Kane

          Yeah because if someone threatens you to give them your money, and you comply, then you must obviously agree with the transaction.

    • Guest

      Technically, they aren’t patents that Android violates. They’re patents that Microsoft CLAIMS Android violates.

      Unlike Microsoft’s infringement of Sky’s trademark, there’s not been any court case that validates these claims. It’s purely protection money: pay us and we won’t sue you.

      Yeah, that’s a formula for long-term success in this industry.

      Wonder when Ballmer’s going to buy Intellectual Ventures to beef up his patent troll portfolio.

      • Ryan Parrish

        Active sync patents were ruled by the ITC to have been violated, and they are part of the collection that gets licensed to Anroid device makers.http://www.eweek.com/c/a/Mobile-and-Wireless/Microsoft-Wins-Patent-Suit-Against-Motorola-Android-Handsets-808814/

        Also, payment for licensing is validation enough and sets a precedent for future lawsuits. The companies that have been licensing either think they can’t win or it isn’t worth the cost to fight them in court to win.

        • Guest

          Fair point about ActiveSync but these aren’t payments for that only. They’re blanket payments for host of alleged but never proven claims.

          Microsoft has been making veiled threats about Linux for years now but never actually takes it to court. That says they know they’d lose. But they’re still happy to use the threat to shake down anyone with money.

          Net is no one likes a patent troll. Apple and Google have their share of this behavior too. But when your business is making more from patent trolling than actually selling product that’s just sad and makes you no better than Intellectual Ventures.

          • Ryan Parrish

            Technically they did fight Linux since MS got SCO the money to fight Linux in court. http://www.businessweek.com/stories/2004-03-10/scos-suit-a-match-made-in-redmond

            The difference is this isn’t patent trolling. Microsoft is actually using these patents in its own products, just not very successfully in the marketplace. Patent trolling is companies like IV that buy patents with no intent on making anything and only intend to bludgeon others for money. In this case MS is trying to make up for loses with patent licensing revenue.
            I don’t like it because I’d rather the company have more successful products, but not because I think defending and profiting from your own patents is necessarily a bad thing, which apparently you seem to.

          • Guest

            Again fair points and thanks for the links.

          • suezz

            activesync – lets see syncing your mobile device to your computer.

            that isn’t obvious is it? only has been done since networks were born.

            do you think the government is going to stop taking money from patents when it can’t bother to balance it’s own budget.

            this patent should of never be granted.

      • Guest

        Wrong, MS has won several court verdicts on Android-related patents, as have others.
        Wrong again. See above, particularly the Moto case in Germany.
        Nonsensical. Everyone is suing everyone right now.
        It’s does need to. It’s got one of the strongest patent arsenals in the industry. Hence the reason so many Android OEMs have signed.

  • suezz

    the patents are non sense. the patents are so obvious none of them should have been issued. it is nothing but a revenue generator for a government that can’t balance its own budget so it isn’t going to stop issuing them any time soon.

    Barnes and Noble was fighting the patents and they were going to be rendered useless but the judge let microsoft withdraw the patents from the case so they live on to extort another day.

    Patent litigation is the one of the most expensive if not the most expensive litigation today. That is why most of the companies don’t fight them. So why fight them when you have judges that let the prosecutors withdraw them when they are going to be rendered useless.

    • Guest

      Um, B&N was widely expected to lose. And in fact are paying a royalty as a condition of the settlement. So don’t know where you’re getting your info that these patents were going to be rendered useless. Indeed the full weight of Google is failing to accomplish this in the Motorola case, and they’re likely going to have to license to. So in short, you’re FOS.

      • suezz

        Um don’t know where you got your information. They only settled after Microsoft pulled patents from the case. They were going to render the patents useless but couldn’t because the judge let them pull out of the case.

        Guess we will have to see the outcome of the Motorola case. It isn’t over yet. But I am sure microsoft will pull any patents out that will be rendered useless and obvious so they can extort another day.

        • Guest

          They pulled one patent of five. Not at all unusual in patent litigation and doesn’t necessarily say anything about the strength of a particular dropped patent. Often it’s done to streamline the case. And B&N *is* paying royalties to MS, so that’s a clear admission that they did in fact agree MS patents read on Android. Motorola has already lost several legal judgments and will almost certainly end up having to license patents from MS. I guess that’s what happens when you rip off other people’s IP.

          • suezz

            Not sure where you got your information but you are wrong. And no it isn’t what happens when you rip off other people’s ip it is what happens when make deals with governments and control trials and judges IMO.

            microsoft has no IP that anybody has stolen.
            people just settle because it is cheaper and microsoft knows it.

            go find out what the gates foundation tried to do in brazil and were rejected but followed the same blueprint in amedica and got it to work.

            Like I said before GUEST microsoft has done nothing for IT industry except extract time and money.

          • suezz

            just as another note it was microsoft that had the injunction against them in Germany in the motorola case but then got a seattle judge to put the injunction on hold.

            that speaks volumes IMO.

          • Guest

            And once again you confirm that you don’t have a clue what you’re talking about. The US FRAND case was/is pending. Google sought and won an injuction in Germany, as part of an attempt to to an end run around the US court. The US saw that for what it was and ruled in MS’s favor. Pretty straightforward, except to a conspiracy whack job like yourself. Oh, and let’s mention what you’re not, namely that all of this is Google trying to extort ridiculously high royalties on technologies pledged under FRAND. And it’s already clear that Google isn’t going to get a fraction of what they asked for because of that, and had no right to demand it in the first place. Let’s also point out that all of this is just Google’s lame attempts to stop the inevitable, namely Moto being forced to license MS patents.

          • suezz

            sorry you don’t have a clue.

            I can tell how you defend active sync and end up name calling when you have no intelligent argument.

            I would go suggest to do some research beyond reading microsoft literature.

          • Guest

            You realize that repeating that stupid phrase doesn’t make it fact, right? If you want to refute what I said, be specific about what is you think is incorrect. The FACT is they pulled one patent and patents get pulled as part of litigation all the time. Now to your other stupid point: they made deals with governments and trial judges. Seriously? So this is all some worldwide conspiracy where MS, Apple, and others have bought off governments and courts to win the Android-related patent disputes that they have? LOFL. What color is the sky on your planet? MS has had its IP violated, as several courts have found. Pro tip: what you “think” is less important than what a court of law determines. Disparaging the Gates foundation now? OMG! Well, you’ve certainly revealed what a complete clown you are. Go troll elsewhere.

          • suezz

            I also wouldn’t doubt microsoft got out of the netscape verdict with just a wrist slap by puttting back doars in their software for the nsa and cia.

            microsoft is slime and have been in court their whole existence becuase they have copied, stolen, and acquired other people’s IP IMO. Yet somehow they always make their way out the corner they back themselves into.

          • Guest

            The more you talk, the less I have to say in order for you to look like the tinfoil hat fool that you clearly are.

          • suezz

            Well I have to say is you show your true colors resorting to name calling.

            Yes when we don’t have an intelligent response let’s call people names.

            Like I said before microsoft has done NOTHING for the IT industry except extract money and time.

            If they vanished today along with the gates foundation the world would be a lot better off.

            We don’t need them and all they do is make technology a lot more expensive for the consumer.

          • Guest

            “Like I said before microsoft has done NOTHING for the IT industry except extract money and time.”
            Like I said, the more you talk the less anyone has to point out what obvious drivel it is.

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