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Summary:

Samsung on Wednesday became the latest and most high-profile Android licensee to agree to pay royalties to Redmond. But the deal may not be so much “extortion” — as Google quickly labeled it — as Samsung’s lack of trust and confidence in Google.

trust

UPDATED: The Microsoft mobile patent licensing juggernaut scored a huge victory on Wednesday when it struck a licensing deal with Samsung, who became the latest and most high-profile Android licensee agreeing to pay royalties to Redmond. But the deal may not be so much “extortion,” — as Google quickly labeled it – as Samsung’s lack of trust and confidence in Google.

According to a new report by the Korea Times, an anonymous Samsung official said the company secured the deal with Microsoft in part because it didn’t believe Google’s $12.5 billion purchase of Motorola would be that helpful to Android licensees.

“If Samsung truly believed that Google’s takeover of Motorola Mobility was going to be helpful to the entire Android eco-system at large, it would have waited until that deal was closed before concluding the license agreement with Microsoft,” said the Samsung official. “Samsung knows it can’t rely on Google. We’ve decided to address Android IP issues on our own.”

UPDATE: The quote from the Korea Times is almost identical to comments in a post written a day earlier by patent analyst Florian Mueller. Mueller explained on his blog Saturday that he originally sent a quote over to the Korea Times reporter, who had also been talking to Samsung officials. The reporter told Mueller later that Mueller’s words were mistakenly attributed to a Samsung official during the writing process, but that Mueller’s sentiments were very similar to what the Samsung official said about having to act rather than wait for help from Google. (story continues below)

The statement, if true, suggests that Samsung questioned the effectiveness of Google’s buy of Motorola in helping provide broad protection for Android licensees. That was one of the key reasons for buying Motorola, CEO Larry Page said at the time: to shore up Android’s patent portfolio as it battled Microsoft, Apple and others. But it also suggests that despite showing support for Google’s purchase of Motorola, Samsung may have quietly had its reservations about the impact it would have on them.

Many, including ourselves, have wondered what the effect of the Google-Motorola deal would have on Android licensees. And at least for Samsung, it prompted them to get moving on their own and not wait for the protection Google promised would happen through the deal. It also suggests that, at best, Samsung questioned the effectiveness of Motorola’s patent protection and, at worst, may not have been convinced that Google bought Motorola mostly for its patents.

At any rate, it appears that Google’s $12.5 billion bid for Motorola hasn’t had the desired effect of ultimately providing more protection for its Android licensees and perhaps persuading some like Samsung to not pay up to Microsoft. Now with Samsung and HTC, along with a host of other smaller Android makers, lining up to pay Microsoft, it makes it more likely for any remaining Android licensees to give in and strike a deal as well. Here’s what Google had to say about the deal:

“This is the same tactic we’ve seen time and again from Microsoft. Failing to succeed in the smartphone market, they are resorting to legal measures to extort profit from others’ achievements and hinder the pace of innovation. We remain focused on building new technology and supporting Android partners.”

From Microsoft’s perspective, it’s not about extortion but providing a clear way forward for Android licensees who are infringing on its IP.

“We recognize that some businesses and commentators – Google chief among them – have complained about the potential impact of patents on Android and software innovation. To them, we say this: look at today’s announcement. If industry leaders such as Samsung and HTC can enter into these agreements, doesn’t this provide a clear path forward? Some carriers have called for companies to enter into precisely these types of agreements to address the patent issues that are important to the mobile marketplace. This clearly makes sense,” Microsoft said in a blog post by Brad Smith and Horacio Gutierrez, General Counsel & Deputy General Counsel.

The Korea Times report said Samsung will pay $180 million in royalties to Microsoft this year, part of $444 million that Microsoft is expected to get for Android royalties through fiscal 2012, according to an estimate by Goldman Sachs. The Times said Samsung won’t necessarily be able to use Microsoft’s patents against Apple but will be able to use Microsoft’s IP in building Windows devices.

Samsung is increasingly looking at hedging its bets on operating systems, supporting both Android and Windows Phone 7 along with its own home-grown Bada. And it’s announced it will help lead development of the Tizen platform, a new open source OS based on Linux.

It looks like collectively, Google is losing some of its hold on one of its top Android makers, who is not waiting around for Google to protect it and may harbor doubts about being too reliant on Google.

It doesn’t mean that Samsung will pull out of Android any time soon. But it shows that the patent cloud surrounding Android isn’t lifting even with the Motorola acquisition and its top manufacturer feels less comfortable relying on Android. Google can say it’s extortion but its partners are voting with their feet.

  1. This remains a problem for Google, but as manufacturers deviate from vanilla, IP issues get increasingly complex.

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  2. Once the iphone 5 with dual core processor, larger screen and thinner lighter body hits the market, apple can claim they have once again got the best phone out there. At least if you compare it to all other phones at the end of last year.
    Then they can get on with their new business model of patent acquisition and lawsuits while building pretty devices that fanboys everywhere can validate over.

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  3. check your source Thursday, September 29, 2011

    That quote, supposedly from an anonymous Samsung spokesperson, sounds remarkably like a quote from this blog:

    http://fosspatents.blogspot.com/2011/09/samsung-takes-android-patent-license.html

    I think someone’s been fooled.

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    1. Exactly!
      When I read the post, I thought it was some FUD being spread. Looks like the sources need to be checked.

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      1. Yes, we’re checking on that. It does seem very suspicious so we’ll update when we get more information.

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  4. Whatever Samsung might say, it is very clear that Samsung wants to diversify and grab every piece of mobile market. Samsung sees value in MS mobile platform and it can’t take a big bet and side with Android. If tomorrow Apple opensource its OS, then Samsung will use that too. That is the reason why it has partnered with Intel on Meego fork. At the end , Samsung just played safe by showing its Google insecurity.

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  5. Good analysis, Ryan. Looks like Google has not articulated a clear path to it’s Licensees how it will protect them. Dominant partners are hedging.

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  6. How exactly are patents supposed to help innovation, if the biggest computing related patent holders, Apple and Microsoft, make sure the market gravitates only around them?

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    1. Patents reward them for sinking time, money and efforts into developing technology. Even if they aren’t successful when they bring their version of something to market, if a competitor makes use of patented functionality the patentee can be compensated.

      Whether MS has been successful in the mobile space or not, they have been working on solving a number of problems for a decade that other players are only now turning their minds to. Why shouldn’t they be compensated for devising a solution and making it public?

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  7. people want Android! Android! Android! now the biggest selling OS, so handset makers build Android. If not Samsung, Huawei can accomodate

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  8. Sloppy sloppy work!

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