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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.

Written by Geek Park

July 7, 2011 at 6:30 PM

Daily Round Up – June 29th, 2011!

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I’ll have my 2 cents editorial coming tomorrow… Sorry, have been quite a busy day. But now, off to the round-up!

The Moment: This was posted on Engadget just minutes ago, but it definitely warrants a mention. IBM Develops “instantaneous” memory, memory that’s 100 times faster than flash memory such as RAM and is cheap enough to be used even in our smartphones. The memory will use a different kind of phase change memory, which has been in a development stage for more than five years and is based on alloys that change their states from crystalline to amorphous and vice versa when controlled by the electricity. Memory will also be durable as well, staying reliable for millions of read/write cycles instead of thousands. While single alloy cell can hold only one bit of data, new alloy cell used in the memory will hold four bits of data, which means more storage can be put into those memories and less latency. In fact, 100 times faster is the worst-case scenario for those memories, which means in normal usage we should be getting speed more than 100 times faster than how fast our RAM or hard drive performs. The memory, according to IBM at least, should also enable us to turn on our computer instantaneously and to not lose our data when computer crashed or turned off. The memory should be available for sale within the next five years.

My Cold, Hard, Bald Predictions: Since I’m not a scientist or engineers for that matter, it’s hard for me to weigh on in this. However, this may signal, coupled with Window 8’s Metro UI, laptops and desktops moving further toward smartphones and tablets, only with bigger screens and keyboards. I can also see the cloud computing becoming much more enterprise-friendly, although Google Docs have done a good job of introducing businesses to the cloud, as this will likely make storage for data center/servers more efficient.

Now, to the links…

Google + users now can send out invites! Hooray… I really could use a Googler friend now.

Microsoft signs the patent deal with Velocity Micro, allowing Microsoft to be paid for every Android handsets Velocity Micro sells. Considering Microsoft makes more money from HTC’s Android department than the entire Windows Phone 7 department, I’m not surprised that Microsoft is doing this.

Windows Phone 7.5, also known as “mango,” is available to developers now

Roku 2! It’s smaller and has a reset button… and that sounds about it for changes.

Two WebOS news (I’ll have a meat-review of TouchPad on Sunday): HP considers licensing WebOS to other manufacturers. Galaxy Tab hardware with WebOS would make a great combination. HP also gives out a $ 50 discount to 32GB $ 599 version of TouchPad to those with Pre, Pixi, or Pre/Pixi Plus. $ 50 discount still makes it barely $ 549, $ 50 more expensive than Asus Transformer for that matter.

Angry Birds on Windows Phone 7 for $ 2.99. With this, Microsoft shows Windows Phone 7 is not the phone to save you from all phones.

HTC Status for AT&T, also known as ChaCha or “Facebook phone,” is released with 800mhz CPU, 2.6 inch screen and 5 megapixel camera. Reminds me a lot of Flipout actually. (Although Status has double the pixel of Flipout)

Delkin releases World’s fastest SDXC card with 45 Mbps (that’s about 6 megabytes per second for you and me) write speed and 95 Mbps (about 12 megabytes per second) read speed. Of course, it costs $ 540. FYI, Sandisk sells 64GB SDXC card, albeit with 15 Mbps read speed, for $ 107.

Google Talk video chat available for T-Mobile 3G and 4G network, although Fring and Qik had this a long time ago.

Kaz Hirai will become Sony Computer Entertainment chairman, and Andrew House will be the new CEO. What’s the difference of chairman and the CEO again?

Nokia’s several handsets with new version of Symbian – known as Symbian Belle – are leaked. Too bad that Nokia already has the grand plan only involving Windows Phone 7. 

Samsung Conquer 4G, with Hummingbird processor and 3.5 inch display as well as a front-facing camera, is a pretty good budget 4G device from Sprint. Although carriers should really stop shoving 4G labels into every phones? What’s next, a 4G feature phone? Wait…

Apple releasing iPhone 3GS unlocked version in India for $ 444, which is still more expensive than original Galaxy S phones. Analyst says Apple will offer a free iPhone 3GS after the iPhone 4S/5 release. iPhone 3GS do beat the crap out of Optimus One line of phones.

PlayLater lets you DVR any websites in case the video expires or is taken down by the content provider. It costs $ 50 a year or $ 5 a month. Don’t know if it can compete with the Netflix’s $ 8 a month streaming movies and tv shows plan.

EA is apparently blown away by Wii U’s performance, since it’s estimated to be about 50% faster than XBox 360 or PS3, it’s no surprise really. Although when PS4 or XBOX 720 develops….

Taiwan touch panel makers are estimating that Amazon will place an order for about 1.5 million – 2 million tablets in the second half of this year. Amazon, launch cheap and you can be big.

EVO 3D may head to T-Mobile as FTC document shows EVO 3D with T-Mobile AWS bands. Considering that T-Mobile already has the Sensation, which is non 3D-version of EVO 3D, I doubt that we’ll see EVO 3D on T-Mobile.

Hackers’ next target? Al Qaeda! I wonder whether hackers are making deals with the government. Imagine something like “hack Al Qadea, and we won’t punish you for hacking Sony.”?

Co-founder of Twitter, Biz Stone, is also leaving the Twitter. Are they not seeing any hope in the company turning in profits?

T-Mobile will get rid of Even More Plus, a contract free plan, and replace with the “Vaule” Plan. Considering that 2GB data costs $ 10 a month on this plan (and 5GB for $ 25), this sounds very attractive to those with heavy data usage. Although with this plan, you do have to sign a contract AND pay a full price on the phone.

Couple MySpace news… Specific Media buys MySpace for $ 35 million and cuts staff by 50%. $ 35 million is about 10% of what MySpace was valued at when it was bought by Murdoch’s News Corp in 2005… and about 0.3% of its value at the peak on 2007. And on a lighter news, Justin Timberlake, who starred in the “Social Network” as an advisor for Facebook and the creator of Napster, becomes MySpace’s creative director, aiming to bring sexy back to MySpace apparently.

In brief: ThinkPad Tablet shown off… in Brazil? LTE Galaxy Tab 10.1 available for a pre-order from VerizonZTE Blade, a budget Android device, sells 2 million units, even exceeding iPhone’s sales for some time.Android app downloads now at 4.5 billion, which is about half the number achieved by Apple’s App Store ...Consumer Watchdog asks FTC to investigate Facebook credits, saying they violate the antitrust lawMore people spend time on the Internet updating Facebook/Twitter/etc than watching Porn nowRegular Macbook may get a refreshRevenue from mobile app stores expected to reach $ 14 billion in 2012, $ 40 billion in 2015Intel increases its lead in the CPU area, with 82.6% market share, AMD with 10.1%Acer is planning to launch a slider table this yearAsus will launch a Meego netbook for $ 200 after JulyAMD will phase out some Phenom/Athlon processors, including high-end six-core CPUs, to make a room for bulldozer/LianoAT&T partners with Zynga, Farmville soon causes you to drop calls…Droid HD appears...Samsung files an another useless ITC complaint, aiming to shut down iPhone and iPad sales

Now, off to the deals…

GTX460 for $ 140 after rebate! Thinkpad X220 without OS for $ 710! 600 Watt power supply AND DVD-burner for $ 45 after rebate! and more…

For the latest quad-core Liano laptop with Blu-ray and Radeon HD 6750M for $ 679 with $ 100 Gift card from Best Buy! 15-inch Sandy Bridge laptop for $ 400! AMD CPU + Motherboard combo starting at $ 100 from Microcenter! and more deals on computer hardwares…

Unlocked Pixi Plus for $ 50 ! LG Revolution (4G phone from Verizon) for a penny! Add 300 minutes to your Sprint Everything Data 450 plans! and more deals on cellphones…

Also, 99 cents deals on movies from DISH network during the Independence Day!

And I leave you off with this…:

 

 

 

 

 

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