Android is patently ill. Two strains of IP disease that may soon derail Google’s OS

Android has been THE smartphone success story of the past couple of years. Android usage has skyrocketed, driven by more devices from more manufacturers than for any other smartphone OS ever. Android now stretches across a price range from ~ $80 to the ultra-high end (yes, there are now luxury phones based on Android).

But outside of a global commercial success, there are problems with Android in a space that, until recently, nobody outside of specialized corporate departments paid much attention to: intellectual property (IP)/patents.

When the first signs of an infection of the Android ecosystem with the malady of IP infringement showed up, most of us laughed them off. The ecosystem was healthy, and the resources of Google were surely going to give its immune system a boost when needed.

Then the threats from Microsoft against pretty much everybody in the industry began in earnest, and Apple started suing – first HTC, then Motorola and then Samsung. The patent illness has broken out, and it turned out that everybody in the ecosystem was on their own. Google just stood on the sidelines, and did nothing at all for a long time.

Apple and Microsoft – two different kinds of threat

Microsoft and Apple both present different dangers to Android:

• Microsoft is a chronic, but manageable disease. It constantly drains energy from the ecosystem through the payments for license deals, which it is ready to strike with anybody it can infect. The only question is the price for these deals. Microsoft doesn’t want the host to die – it is content to suck out its marrow.
  Additionally it pushes Microsoft’s own Windows Phone as the cure for its own attacks. Use Windows Phone, possibly for the same price as a patent license fee, and the disease disappears. You’re also assured that no other patent disease can attack you in regard to these phones: Microsoft gives you blanket indemnification against any other software patent lawsuits regarding Windows Phone devices. Since Microsoft has been incredibly active in getting software patents, they should have the ammunition to back up their indemnification against anybody else in the mobile space.
  Microsoft’s attacks are about fundamentally altering the basis for a manufacturer’s decision for Android vs. Windows Phone. The results are either Android phones that are less price competitive across the board, and disastrously so at the low end, or an exodus of manufacturers towards Windows Phone.
• Apple, on the other hand, is a deadly illness. They are not in the software licensing business, so their goal cannot be selling a cure. They are running a hardware business with incredible margins. Their goal is to give their own devices every possible advantage out there. To this end they use their patents to kill off as many of their competitor’s products, in as many markets as possible. Apple goes for the leaders in the field first: Motorola – as the then leading manufacturer of ‘Droids’ in the US market, HTC and Samsung – as the biggest worldwide brands in Android phones. They want to take out the strongest competition first.
  With Microsoft paying up is an option. Apple’s strategy leaves only countersuits as a defense. So far the competition seems to have drawn mostly blanks in finding suitable antibiotics here. Samsung trying to use standards-essential patents it has to license under FRAND conditions can well be seen as a sign of desperation, and the fact that so far Motorola also hasn’t produced a silver bullet also speaks volumes.

It is unclear whether some of the incredibly broad Apple patents are going to stand up in the long term (e.g. their frankly ridiculous multi-touch patent), but then it’s not primarily about the long term. Mobile is a an ecosystem of launch fast, become obsolete within a year or two, and by the time any lawsuit or patent reexamination is finally resolved, a couple of product life cycles have passed. Even delays of a few months can spell disaster in a market moving as quickly as this.

So how far has either disease spread?

HTC was the first to cut a deal with Microsoft, several smaller manufacturers followed, and now, with Samsung having joined the pool of licensees, it’s clear that everybody who wants to sell Android devices in most of the developed world will have to do so as well. The financial terms of the licensing deals are unknown, but seeing what Microsoft wants to achieve, the amounts should be something in the same order of magnitude as the license payment for Windows Phone. Figures of between $ 5 and $ 15 per device sold have been bandied about, and this is a range that fits with that. While something like $ 5 is not going to hurt with a high-end device, with a $80 phone it really matters. So far we haven’t really seen a mass defection to Windows Phone, but the next few months might be interesting in that regard.

Apple’s lawsuit against Motorola continues; it has scored an early victories against HTC in ITC court which may eventually result in blanket HTC Android product ban in the U.S.; and Apple is stepping up its attack on Samsung in courts all around the world. It has won the first victories against the latter too, banning some Samsung Android devices in several countries. Samsung is set to take a hit during the Christmas shopping season.

They have started to design around some of the patents (as, incidentally, has Google), but a couple of the patents Apple asserts might reach so far that there is nothing that Samsung, or any other Android manufacturer, can do to circumvent them. Considering the pace at which patent lawsuits usually move, Apple is doing quite well with its efforts.

Google’s announced purchase of Motorola, which was the supposed cure-all for all patent diseases, hasn’t had any noticeable effect so far. The deal itself takes time to finalize, and might yet fall through, so there’s no help in the short term. And then Motorola’s patents haven’t been enough to stop both Microsoft and Apple from suing Moto, or to end the lawsuits before now. It’s quite likely that Motorola just doesn’t have any silver bullets in its patent portfolio. As Samsung’s deal with Microsoft shows, most in the industry have woken up to these facts, and are trying to go fix problems on their own.

So the attacks on the Android ecosystem are spreading. Presently Android still looks healthy. It is huge and still adding users and market share. The momentum is still there. The infections are strictly limited to markets where Microsoft or Apple hold patents, and Android has spread far wider than that. There are huge markets that are not threatened at all by what is happening now. Even without a resolution of any of its problems, with Android adoption in these markets widening, the infection will take a while to show up in the total numbers.

But make no mistake – underneath it all, Android is seriously ill. And, unlike the problems at Nokia or RIM, Android’s patent disease is one that even setting ever new records in device activations, market share and device releases can’t cure.

PS: There is, of course, also the Oracle lawsuit directly against Google over the use of Java technology in Android. That falls into the category of ‘chronic, but manageable’, since Oracle have no current interest in mobile space, and only want to extract as much money as possible without killing Android off. Add another $ 5 – 15 per device to the BOM for an Android phone.

This post was written by a mobile tech enthusiast Alexander Gödde. He works for mobile software  start-up Tavendo, andshares his thoughts about mobile industry in his free time.

 

If you liked the post, you might find these interesting too:

• The Microsoft Tax is official: Samsung will pay royalties for each Android phone or tablet it sells
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• Google buys Motorola to get some patents. Samsung, HTC, LG and other Android OEMs rejoice
• LG agrees to pay Microsoft royalties for every Android device it sells
• Google officially buying Motorola Mobility for $12.5 billion

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