Microsoft Snags Android Patent Deal with Quanta, Another Big Win

October 14th, 2011 by Trefis Team
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Microsoft (NASDAQ:MSFT) saw another major victory this week when it signed a patent licensing agreement with Quanta, an Android device manufacturer. [1] Under the agreement, Quanta will pay Microsoft royalties for each Android or Chrome OS powered device that it sells. This could be considered one of Microsoft’s victories in its bid to get patent licensing fees from each Android device manufacturer. Quanta is a major manufacturer based in Taiwan and coincidentally is also the device manufacturing partner of Amazon (NASDAQ:AMZN), which makes the new Kindle Fire tablets that recently launched. We expect Amazon to sell millions of Kindle Fire tablets by the end of the year.

We estimate that Microsoft will make close to a billion dollars from Android which is backed by Google (NASDAQ:GOOG), patent licensing in 2011. We currently have a $28 Trefis price estimate for Microsoft, which is around 3% above its current market price. Microsoft’s stock jumped up a bit following news of the agreement.

Check out our complete analysis for Microsoft

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Microsoft Could Make Tens of Millions from Quanta Alone in 2011

We estimate that Amazon will sell around 3 million Kindle Fire units by the end of the year going by the current rate of pre-orders/sales. [2] Assuming a $10 licensing fee for each device, Microsoft will make $30 million from Quanta in 2011, and presumably much more in the coming years.

Microsoft now has all major Android device manufacturers as licensees. The laundry list includes Samsung, HTC, Acer, Onkyo, Velocity Micro, ViewSonic and now Quanta. It may even force Motorola, which was recently acquired by Google, to sign a patent licensing deal with it soon.

Also read: Samsung Licensing Deal a Symbolic Defeat in Microsoft, Google Patent War

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Notes:
  1. Microsoft and Quanta Computer Sign Patent Agreement Covering Android and Chrome-Based Devices, Press Release [↩]
  2. Leaked Sales Numbers Suggest Amazon Kindle Fire On Track To Outsell iPad, Cult of Mac [↩]