Microsoft also makes money when users utilize some of its applications that are built in every Windows Phone device, like Bing. Reportedly, Microsoft Corporation (NASDAQ:MSFT) will also generate a little more than $3 billion in patent fees from Android devices this year.
Furthermore, Nokia is the only company that receives payments from Microsoft, whereas other Windows Phone device manufacturers don’t get to enjoy that benefit. Next year, as Windows Phone sales continue to grow in double-digits, Nokia Corporation (ADR) (NYSE:NOK)’s payments to Microsoft will pass Microsoft Corporation (NASDAQ:MSFT)’s payments to Nokia Corporation (ADR) (NYSE:NOK).
How it all started
For Google Inc (NASDAQ:GOOG), Android was about “being relevant” rather than making money as it started. The story is same with Microsoft’s entrance to the smartphone market. The company saw how PC sales had been declining in double-digits while smartphone market was growing at double-digits, so it decided to shift toward the mobile market in order to stay relevant. Both companies acted on fear that they wouldn’t be relevant anymore if they didn’t jump from the rapidly-declining PC market to the rapidly-growing smartphone market.
While they didn’t tell us how much they spent on building their mobile operating systems, both companies undoubtedly invested loads of money on them. Google Inc (NASDAQ:GOOG) might be able to find a way to monetize Android, but in the short term, it looks like Android won’t exactly be a cash cow compared to iOS and Windows Phone.
Conclusion
In the next few years, the war between the Windows Phone and Android will intensify, especially in the medium and low-end markets. Google Inc (NASDAQ:GOOG)’s warrior on the field will be Samsung and Microsoft Corporation (NASDAQ:MSFT)’s knight will be Nokia. Both companies have a wide range of phones that address many different markets with different income levels and preferences.
For the time being, Samsung has a head-start but we are in a rapidly evolving market and head-starts mean very little. If you don’t believe me, ask BlackBerry Ltd (NASDAQ:BBRY) who enjoyed a huge head-start as little as a few years ago.
The article Microsoft May Make More Money From Windows Phone Than Google From Android originally appeared on Fool.com and is written by Jacob Steinberg.
Jacob Steinberg owns shares of Nokia Corporation (ADR) (NYSE:NOK) and Microsoft. The Motley Fool recommends Google. The Motley Fool owns shares of Google Inc (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT). Jacob is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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