Why stop when you're on a roll?
Microsoft (NAS: MSFT) has been inking deal after deal of patent licensing agreements with handfuls of Google (NAS: GOOG) Android device makers. While litigation is still pending with the likes of Foxconn, Barnes & Noble (NYS: BKS) , and Motorola Mobility (NYS: MMI) , Microsoft can now add growing Chinese device-maker Huawei to its hit list.
Huawei's chief marketing officer, Victor Xu, has confirmed that the two companies are at the negotiating table, and that "Microsoft has come to us," looking to add another notch to its Android stick.
Most U.S. consumers probably aren't all that familiar with Huawei, since the company has long produced "white label" devices that carry others' brands -- the latest example being the Huawei MediaPad, a 7-inch Android tablet that is being rebranded and sold as the T-Mobile Springboard. That may all soon change, though, as Huawei's newest devices will begin sporting its own brand.
It's a strategy that worked wonders for Taiwanese HTC, which I've only dreamt of investing in. The HTC Dream was the first Android device ever and was marketed as the T-Mobile G1. Over the years, HTC began to transition to its own branding and has become one of the most prolific Android OEMs, alongside Samsung.
Huawei has a strong position on its home turf in China, but its overseas revenues have been growing and represented 65% of sales last year. Over the past four years alone, overall revenue has more than tripled to $27.4 billion last year. Keep in mind that Huawei has various telecommunications-related segments, and Android devices are just part of its revenue picture. Last year, its overall Devices segment contributed just 16.6% of revenue.
Microsoft isn't just on the receiving end of patent royalties; it also just signed a licensing agreement with Openwave (NAS: OPWV) to utilize that company's IP portfolio. Openwave is also currently pursuing Research In Motion (NAS: RIMM) and Apple (NAS: AAPL) over the same patents.
We can argue all day whether Microsoft has turned into a patent troll, but the fact still stands that the courts are siding with Mr. Softy, and that spells trouble for current and prospective Android OEMs. The count is up to 10; will Huawei give in and make it 11?
At the time this article was published Fool contributor Evan Niu owns shares of Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google, Microsoft, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Microsoft, and Google and creating bull call spread positions in Microsoft and Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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