How much could Microsoft reap from Android licensing deals?

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Microsoft (NASDAQ:MSFT) could be positioning itself to turn the runaway success of Google's (NASDAQ:GOOG) Android platform into a distinct financial advantage by striking patent licensing deals with Android licensees like HTC, Motorola Mobility (NYSE:MMI), Samsung and others.

Microsoft struck such a deal with HTC last year, and HTC reportedly pays Microsoft $5 for every Android phone it sells. At $5 per device and 500,000 Android device activations per day, Android could be a $912.5 million annual business for Microsoft--but only if the software giant inks deals with all of Android's supporters.

And that's what Microsoft appears to be doing. Microsoft recently inked licensing deals with four small Android device makers: General Dynamics Itronix, Onkyo, Velocity Micro and Wistron. And the company is targeting larger players as well: Microsoft sued Motorola in October 2010, alleging that Motorola's smartphones running Google's Android platform violate Microsoft patents. Further, according to a Maeil Business Newspaper report from South Korea that cited unnamed industry officials, Microsoft wants Samsung to pay $15 for every Android phone it sells, though Samsung will probably try to reduce the payment to $10 per phone in exchange for a stronger commitment from Samsung to Microsoft's Windows Phone 7 smartphone platform. Microsoft and Samsung declined to comment on the report.

Brad Smith, Microsoft's chief attorney, discussed the company's licensing issues with reporters in June, according to the Seattle Times. Regarding reports that HTC pays Microsoft $5 for every Android phone it sells, Smith said, "That seems like a fair price," noting that $5 is less than how much Microsoft charges for each Windows Phone license.

For more:
- see this Seattle Times article
- see this GigaOM post
- see this AllThingsD article

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