If you’ve been following the tech news, you’ll know that iPhone-purveyor Apple has launched a patent infringement lawsuit against HTC, one of the flagship (Taiwanese) phone manufacturers partnered up with Google and Microsoft to push Android and Windows phones. While HTC may be the company listed on the lawsuit, it was fairly clear that this was a blow against all iPhone imitators and especially against Google’s Android mobile phone (which was recently reported to have generated more mobile web traffic in the US than the iPhone).
But, as I’ve pointed out before, the lines between enemy and friend are murky in the technology strategy space. It would seem that Microsoft may have just thrown HTC (and hence the Android platform and other would-be iPhone-killers) a surprise lifeline:
REDMOND, Wash. — April 27, 2010 — Microsoft Corp. and HTC Corp. have signed a patent agreement that provides broad coverage under Microsoft’s patent portfolio for HTC’s mobile phones running the Android mobile platform. Under the terms of the agreement, Microsoft will receive royalties from HTC.
The agreement expands HTC’s long-standing business relationship with Microsoft.
“HTC and Microsoft have a long history of technical and commercial collaboration, and today’s agreement is an example of how industry leaders can reach commercial arrangements that address intellectual property,” said Horacio Gutierrez, corporate vice president and deputy general counsel of Intellectual Property and Licensing at Microsoft. “We are pleased to continue our collaboration with HTC.”
Why? I’d conjecture its a combination of three things:
- Sizable royalty stream: Microsoft is an intellectual property giant. But, given Microsoft’s tenuous and potentially weakening position in mobile phones, they have probably been unable to fully monetize their own intellectual property. Why not test the waters with a company who is already friendly (HTC is a leading supplier of Windows Mobile phones), who desperately needs some intellectual property protection, and is churning out Android phones as if its life depended on it? And, if this works out, it opens the doorway for Microsoft to extract further royalties from other Android phone makers as well (and its even been suggested ominously that perhaps Microsoft is using this as an intellectual property ploy against all Linux systems as well).
- The enemy of my enemy is my friend: Apple is the Goliath that Windows, Blackberry, Symbian, WebOS, and Android need to slay. Given Microsoft’s unique advantage from being the leading PC operating system, one potentially feasible strategy would be to simply stall its competitors from building a similar position in the mobile phone space (like by helping Android take on Apple) and, when Microsoft is nice and ready, win in mobile phones by moving the PC “software stack” into the mobile phone world and creating better ties between computers (which run Microsoft’s own Windows operating system) and the phone.
- HTC probably made some fairly significant concessions to Microsoft: I’m willing to bet that HTC has either coughed up some extremely favorable intellectual property royalty/licensing terms or has promised to support Microsoft’s Windows Phone 7 series in a very big way. Considering how quickly HTC embraced Android when it was formerly a Windows-Mobile-only shop, its probably not a stretch to believe that there were probably active discussions within HTC over whether or not to drop Microsoft’s faltering platform. An agreement from HTC to build a certain number of Windows phones or to align on roadmap would be a blessing for Microsoft who likely needs all the friends it can get to claw back smartphone market share.
Obviously, I could be completely wrong here (its unclear if Microsoft can even provide HTC with sufficient legal “air cover” against Apple), but the one thing that nobody can deny is that tech strategy is never boring.