Microsoft, HTC Expand Mobile Patent Alliance Beyond Windows Mobile

Microsoft and Taiwanese handset maker HTC are expanding a patent agreement through which Microsoft will now provide coverage for HTC's Android phones under the software giant's patent portfolio.

Android phones have grown to become an important part of HTC's business, patent coverage for which it's willing to pay Microsoft (NASDAQ: MSFT) royalties, the two companies said.

"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," Horacio Gutierrez, corporate vice president and deputy general counsel of Intellectual Property and Licensing at Microsoft, said in a statement. "We are pleased to continue our collaboration with HTC."

Microsoft and HTC, which currently collaborate on Windows Mobile handsets, did not respond to requests for comment as of press time.

Microsoft and HTC Forge Alliance Beyond Windows Mobile

HTC is a long-time Windows Mobile OEM that has only recently expanded into Android. An AdMob metrics report for February (available here in PDF format) showed the firm had four of the most popular smartphones. All trailed the iPhone, of course, but no other vendor had more than two phones.

This is proving quite a boost for HTC. For the first quarter of 2010, the company reported revenues of 37.7 billion Taiwan New Dollars (US$1.19 billion), a 19 percent improvement over the first quarter of 2009, and income of 5 million TND (US$159,000), a 3 percent improvement over the 4.87 million TND from the same quarter last year.

Of course, HTC's booming Android business has already prompted at least one dust-up over intellectual property, with the company currently embroiled in a lawsuit from Apple.

Not surprising, then, that some analysts see HTC being eager to avoid a similar patent fight with Microsoft -- which itself has taken a famously dim view of some of the intellectual property in use within the Linux open source operating system on which Android is based.

"It looks like Microsoft are saying, 'Hey look, if you are building phones using the technologies we've developed, you need to pay us for them,'" Avi Greengart, research director for mobile products at Current Analysis, told InternetNews.com. "I would imagine those negotiations were not the most contentious in the world, because Microsoft wants to make sure HTC continues building Windows Mobile phones."

Similarly, another analyst sees the deal serving chiefly to strengthen the two companies' ties.

"My reaction was simply that Microsoft is clearly stepping up the agenda to get ready for Windows Phone 7," said Gerry Purdy, principal analyst for mobile and wireless at MobileTrax. "They don’t want to lose HTC as their primary client."

HTC, meanwhile, is in a tough situation since, unlike Apple, it does not own the smartphones' operating environments, Purdy said. That involves keeping OS partners including Microsoft and Google happy.

"One day you're sitting down with Google to make Android work, and the next day Microsoft shows up," he said.

"I think the main call is you've got HTC trying to placate its licensees and trying to stay like Switzerland, because they see Microsoft as an important player long-term, like Android," Purdy said.

Andy Patrizio is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.


Android, Microsoft, patent, Windows Mobile, HTC