Analyst Claims Microsoft Earns $2 Billion Per Year From Android Patent Royalties

Jay Yarow, writing for Business Insider:

Microsoft is generating $2 billion per year in revenue from Android patent royalties, says Nomura analyst Rick Sherlund in a new note on the company. He estimates that the Android revenue has a 95% margin, so it’s pretty much all profit. […]

Sherlund says that if you back out the Android profits, Microsoft is probably losing $2.5 billion on Skype, Xbox, and Windows Phone. Of that, $2 billion in losses are attributable to the Xbox platform.

Take all of this with the usual grain of salt for anything attributed to an analyst, but if it’s all true, it’s rather stunning — both in terms of how much money Microsoft is making on Android’s back, and in terms of Xbox being a sinkhole. (If it’s true that Xbox is losing billions of dollars per year, it certainly puts Sony’s and Nintendo’s console struggles in a different light. It’s hard to compete against a rival that is willing to lose billions year after year after year.)

Wednesday, 6 November 2013