Android More Profitable to Microsoft than Windows Phone

Google's mobile operating system, Android, is bringing more money to Microsoft than the Redmond company's own mobile platform, Windows Phone, does, a recent analyst estimate unveils.

More importantly, the revenues from Android involve only one mobile phone maker, namely HTC, while those for Windows Phone include all of the handsets coming from all Microsoft partners.

According to Citi analyst Walter Pritchard, who has just released a report on Microsoft, Android brings to the software giant five times more money than Windows Phone does.

For each Android device that Taiwan-based mobile phone maker HTC Corporation sells, Microsoft receives $5 in patent fees. The company also gets $15 for each Windows Phone device.

A rough estimate suggests that HTC might have sold around 30 million handsets at a time when only 2 million Windows Phones were sold.

At $5 a piece, HTC's Android phones worth $150 million in revenues for Microsoft, while the revenues from Windows Phones would go only as high as $30 million.

As stated above, this applies to HTC Corporation alone, but there are many other vendors selling Android-based devices as well.

Provided that the Redmond company signed similar deals with more of them, one can easily see how Android is indeed more profitable to Microsoft than Windows Phone is.

After all, Steve Ballmer, the company's CEO, did say in October last year that Android is not free.

When it comes to Android, “Google appears to have very little IP to defend itself with,” Pritchard stated, according to Business Insider.

According to another Citi analyst, Kevin Chiang, Android mobile phone makers do not enjoy high operating margins. At only 10 to 15 percent, they are indeed low, but not as low as those expected for tablet makers, which would sit at only 2 to 3 percent.

For HTC however, the sum it has to pay to Microsoft is not that much, considering the total revenues the handset vendor has posted for the last few quarters.

During the first quarter along, the company sold a little short of 25 million smartphones, and announced revenues of $3.6 billion (up 174.5 percent year-on-year).

Provided that 20 million of those devices were running Android, it would mean that HTC paid Microsoft about $100 million in patent fees for them.