Analyst – Microsoft rake in $2 billion a year from Android

Analyst   Microsoft rake in $2 billion a year from Android

We’re never overly keen on “analysts” who “estimate” figures, but we’ve known for quite some time that Microsoft have been making a good return from patent royalties.

Put simply, Google have to pay Microsoft a fee for every Android handset because of Microsoft patents used in the OS. The total revenue from that isn’t known, but Nomura analyst Rick Sherlund has done some calculations and reckons that a massive $2 billion per year comes into the company from Android patent royalties.

Rick also estimates that this revenue has a 95% margin, so mostly all profit. Figures detailed in the Entertainment and Devices revenue statement (which includes Xbox and Windows Phone too) showed that the group was always profitable, but if you remove the included $2 billion revenue from Android it leaves a loss of $2.5 billion on Skype, Windows Phone and Xbox.

Effectively, based on these numbers, Microsoft is using the patent cash to hide the huge losses in their mobile and Xbox groups.

BusinessInsider has more details, with the analyst advising that the Xbox group, which is losing $2 billion based on his estimate, should be split into a different group so that we can have greater visibility of the profits. Also, presumably, it would help to backup his guesswork.