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Posts Tagged ‘lawsuits

Oracle looks to grab $ 20 from every Android handsets sold, Android may become the most expensive OS to license.

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According to rumors, Oracle is looking to grab $ 15 – 20 from every Android handsets sold. This comes from the litigation by Oracle, which sued Google last year for violating patents in Android OS.  USPTO found most of Oracle’s complaints invalid, with five of seven patents already declared fully or partly invalid. So, this news comes even at a more surprising time. With 100 million Android handsets already sold and 500,000 new activations every day, money adds up quickly. If the court sides with Oracle in the Oracle-Google case, Oracle can see as much money as $ 10 million from Android handset manufacturers every day. That adds up to $ 3.65 billion every year.

It’s unlikely that Oracle will get that much amount of money. Oracle itself stated that experts see the company winning much as $ 2.6 billion from Google, which was the number Google quickly dismissed. It’s also possible that this lawsuit may drag on for years, just like much of patent lawsuits today are. Given the big stake of this lawsuit, either company will look to appeal to the highest court possible. But this underlines the difficulty of being Android handset manufacturers.

Microsoft also is the big player in grabbing money from manufacturers. The company already signed a deal with HTC that give Microsoft $ 5 for every HTC Android handsets sold (which ironically makes Microsoft more money than licensing fees Microsoft got for Windows Phone 7). Microsoft is also looking to sign a deal with Samsung that will give it $ 15 for every Samsung handsets sold. Rumor is that Samsung declined to pay $ 5 per handset fee so that Microsoft increased the fee, but $ 5 or $ 15, it’s still very significant money for manufacturers whose profit margins are already very thin. Typical smartphone costs around $ 180 to make, but combined with a shipping/retail/development cost, the cost skyrocket, hence the exorbitant money to buy an unlocked cellphones. For instance, typical smartphone manufacturers have a gross income ratio of around 30%, but operating income (which counts employees’ wages/upkeep of retail stores/etc as deficits, which a gross income ratio doesn’t) hovers around 10%.  For instance, HTC sold close to 12 million smartphones at an average price of $ 360 (which went down by $ 30 year-to-year due to manufacturers’ race to create entry-level Android smartphones). With operating income at 15% for HTC, HTC makes $ 55 for every Android handsets that they sell, which adds up close to $ 700 million in operating income. However, in addition to Microsoft payment, if HTC have to pay $ 15 to other manufacturers in patent settlements, the profit will decrease to $ 500 million, more than 25% decrease in the HTC’s profit.

Sure, HTC can survive. Samsung can survive. But they would look toward manufacturing phones for other operating systems if they have to pay more for Android than they have to for other OS. This creates a huge opportunity for Windows Phone 7, which only asks manufacturers to pay $ 15 and gives manufacturers a united, clean, smooth operating system in return, as well as for the WebOS, which is one of the best mobile operating system on the market today.

What this move also does is that it discourages manufacturers specialized in creating budget smartphone from creating Android handsets. As much as ZTE Blades and Optimus Ones were sold, $ 10 ~ 20 licensing fee will make those sub-$ 200 smartphones loss leaders, since manufacturers can only go so far in cutting costs. This significantly undermines Google’s plan of spreading Android into becoming a de facto OS for cellphones just like Windows OS. Google, which makes 90% of money from ad revenue, will be significantly affected by budget users moving away from Android and choosing other operating systems, which may feature different search engines such as Bing, or even go back to feature phones, significantly reducing the reach of Google’s mobile ad service.

Of course, the question is will Google let that happen? Nortel auction, which Google wasn’t even interested in winning, didn’t seem to show that Google was willing to grab patents that may allow it to defend itself against patent lawsuits. Instead of Google, we have seen manufacturers stepping in, with HTC buying S3 Graphics and Samsung counter suing Apple for violation of its patents. But if Google fail to act in any way, it’s hard to see how manufacturers can stand paying $ 10 ~ 20 for every handsets that they sell if they can go to other, better operating system that make you pay less.

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Written by Geek Park

July 7, 2011 at 6:30 PM

Daily Round-Up!: July 6th, 2011

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Long time, no see! Round-up is back! I’ll try to keep round-ups going forever and ever and ever… alone. (Give me a moment as I quiver in the corner and cry)

The Moment: HTC (Sort of) buys S3 Graphics for $ 300 million. The important thing to consider here is that HTC and VIA, which had a joint venture with S3 Graphics, are owned by the same owner. Also, HTC chairperson, Cher Wang, is a major shareholder of S3 Graphics. But as symbolic as this move can get, it’s significant.

Although it’s far from final (the final decision is scheduled to come November), initial ruling from ITC ruled that Apple has been infringing on two of S3 Graphics’ patents. This, itself, can stop the sale of Apple’s iPhones and iPads in the U.S. But this buyout further increases the importance of ITC’s ruling if ITC rules against Apple.

As many know, HTC has been in a lawsuit with Apple for more than a year, with no end in sight. There was an initial complaint filed by Apple, who sued HTC for violating 20 patents such as “unlocking a device by performing gestures on an unlock image” (think “swipe to unlock”). And there was a counter suit filed by HTC, accusing Apple of violating five patents. Administrative judge Carl Charneski will make his decision on those initial lawsuits on the August 5th, which is also the date that Apple requested a hearing for preliminary injunction against Samsung (What a busy day!). While it’s unlikely that those patents from S3 Graphics will factor into lawsuits yet, given that the HTC/S3 merger have to be approved by the Taiwan government, it can create a further ground for more counter suits by HTC. HTC can use those patents to defend against Apple’s lawsuit if the case stretches any longer.

Obviously, what most people and I think is that Apple will eventually sign cross-licensing agreements with every manufacturers that it has sued, so this buyout may even provide a better negotiation table for HTC if Apple drops its lawsuits.

There’s also a matter of HTC paying Microsoft $ 5 for every HTC Android handsets sold, but that’s for an another day… (Have you heard Microsoft is now requesting Samsung to pay $ 15 for every Android handsets they sell? Microsoft is either crazy, or scary)

Now, off to the links…

Another iPhone 5 rumor. Thinner and lighter. Zzzzzzzz. 25 million iPhone 5 may ship this year. Zzzzzzzz. By the way, second and third generation of iPod Touch were 8.4mm thin. Do you think iPhone 5 can be even thinner than that? iPhone 4 is only 9.3mm thin.

Now you can jailbreak your iPad 2 on your Mobile Safari! I’m pretty sure people will do useful stuff with jailbreaking. Like I don’t know, widgets?

iPhone 5 may come to Sprint. At least one analyst says so. I bet I can pay an analyst $ 1000 to say that  iPhone 5 may come to Metro PCS.

iPad 2 Plus, with a better display, may launch this year. Given that “retina” display on tablets are not even on the caliber of “retina” display on smartphones, not to mention much higher graphics processing power required to power a such high-resolution display, I doubt this improve the user experience greatly.

Xoom 1 has been out for four months. Cue the Xoom 2 rumor! Now on FCC!

Droid 3, with its Atrix spec and a 5-row keyboard, may launch with $ 460 unlocked price. Given that Droid 2 sells close for $ 370 unlocked on Amazon, this is a very good deal if the leak is true… In a meanwhile, rounder Droid Bionic!

Speaking of Amazon, those with a paid Cloud Drive subscription will get a “limited time” to get unlimited storage for their music. Given how long it take to even upload 5 GB of music, I don’t know how long it would take to upload 100 GB of my music.

WTO finds that China is violating WTO law because the country put a cap on export of rare metal. I don’t know China follows those kind of rules.

iBooks may push iTunes revenue to $ 13 billion by 2013. Wait, I thought Kindle was still leading.

Lastly… Facebook partners with Skype to bring video chat to Facebook as well. So, no more need for ooVoo or other desktop video chat apps, right? Facebook is definitely trying to bankrupt lot of companies. Oh, also, new group chat features and an updated chat UI. Hopefully video chat comes to mobile Facebook apps as well… But, of course, we have seen all this before. (If anybody has a Google+ invites that they can give out, please contact me)

Deals:

Spotify comes to US. Get your invites… NOW!

Taco Bell.. Free WiFi and in-store TV! Now I can stop go to McDonald for my WiFi fix.

 

Free Power Rangers SMASH app for your iPhone! Evo 3D for $ 113 on WireFly! Droid Incredible 2 for a penny!

 

Wi-Fi Xoom at $ 499…16GB of DDR3 Ram for $ 120! 4GB refurbished MP3 player for $ 25! 

Last day to lock up your unlimited plan for Verizon. Good luck with that (for those on East Coast, too bad!) and Good night!

 

 

Written by Geek Park

July 6, 2011 at 7:50 PM

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