Microsoft will earn royalties from individual Android and Chrome-based handset sold by Dell.
Microsoft already has patent agreements with most major manufacturers like Samsung, HTC and LG over the use of its patents for Android. Today, the software giant announced that it is entering into an agreement with Dell which sees both organizations cross-licensing patents related to Android and Chrome OS devices in addition to Xbox consoles.
Under the terms of the new deal, Dell will pay Microsoft royalties on Android and Chrome OS device sales, while Microsoft will be “on consideration to Dell for a license for Xbox gaming consoles.” The last statement gives Dell the leverage to utilize Microsoft’s Kinect motion-sensing technology in its hardware.
Microsoft makes more money from Android than its entire Windows Phone line. It is estimated that the Redmond giant earned around $2 billion last year from Android licensing. Manufacturers like Samsung and HTC, who signed the licensing deal in 2011, were claimed to be shelling out $5 to $12 to Microsoft on every single Android device sold.
Given the steady rise of Android-based devices, it is only likely that the amount of revenue generated by Microsoft through its licensing agreements will increase over the coming years. Microsoft is in a win-win situation with its licensing agreements. It stands to make billions of dollars yearly without undertaking any effort, while the overall cost of each handset will increase as manufacturers have to factor in the $5 to $10 license fee for every handset running Android.