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Microsoft reportedly cutting patent fees in exchange for pre-installed apps

Hardware supply chain sources report that Microsoft is offering discounts on patent royalties to Android manufacturers which pre-install its apps onto their devices.

Published onApril 14, 2015

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Last month, Microsoft announced a global partnership with Samsung and other hardware manufacturers to bring its mobile productivity services, such as its Office suite, to consumers and business users. But there may be more to it than simply offering customers compelling services, DigiTimes Research suggests that Microsoft is tempting Android manufacturers to pre-install its software in exchange for discounts on its licensing fees.

Android hardware manufacturers have all signed a patent licensing agreement with Microsoft for various essential technologies developed by the company. However, according to findings from Taiwan’s and China’s smartphone/tablet upstream supply chain, Microsoft is offering discounts to those who pre-install Office programs such as Word, Excel, PowerPoint and OneNote, as well as OneDrive and Skype onto their Android devices. So far, 11 hardware partners are signed up to the deal.

Interestingly, Microsoft and Samsung recently came to an agreement regarding a billion dollar license fee dispute, although the terms of the deal were not disclosed. Perhaps pre-installation of Microsoft apps in the Galaxy S6, S6 Edge, and upcoming Samsung tablets had something to do with it?

For Microsoft, a company that is struggling to secure itself a share of the mobile market, the benefits are clear. The company hopes to increase its software user base outside of its hardware share. We’ve seen that Microsoft is pushing free, cross-platforms applications to Android lately, as the company takes a more software focused approach to revenue. For Android manufacturers, the additional revenue is sure to be a welcome bonus, especially given how competitive and price sensitive some segments of the market have become.

We’ll have to see how Google would react to hardware manufacturers installing competing services from Microsoft, as it is unlikely that the company will be able to persuade OEMs not to sign up. It’s quite likely that a number of Android manufacturers will take up Microsoft’s offer later this year.

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