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MS reaping windfalls from Android

30 May 2011
00:00
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Android may be storming the handset sales charts, but two recent pieces of research show the news is not all good for the Google-owned OS.

A Citi analyst has estimated that Microsoft gets $5 for every HTC phone that runs Android, as a result of a settlement over an IP lawsuit, BusinessInsiderreported on Friday.

Microsoft is also suing other Android handset makers, including Motorola, and is reportedly seeking to receive between $7.50 to $12.50 per device in future agreements.

If calculations by market intelligence firm Asymco are accurate, this means Microsoft is and could continue to receive more money from Android than from the rival Windows Phone platform.

Worse still, Google has very little IP with which to defend such claims, according to Citi.

Citi has also estimated that Android handset makers have operating margins in the range of 10%-15%, and makers of tablets using the OS have to contend with margins of just 2%-3%.

 

The second set of sobering figures come from app store analytics firm Distimo, which last week published research which claims that 80% of all paid apps and nearly 20% of all free apps on the Google Market have been downloaded less than 100 times.

 

Only two paid apps on the market have been downloaded on the more than half a million times worldwide, compared to Apple's App Store where 6 apps hit that milestone in two months from US sales alone.

 

This means developers are finding it more challenging to turn a profit on the Android Market using a one-off fee model, Distimo said.

 

But the report notes that developers have pursued an ad-funded model, with feedback from one high-profile adopter, Rovio, indicating that this can be successful. It adds that the introduction of in-app billing should also give developers more opportunities to earn from the Market ecosystem.

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