20
Nov
RIMG_1400_1600x1200

HTC CEO Peter Chou has come out swinging against allegations that HTC is paying "$6-8 per handset" in royalties to Apple, calling the estimates "outrageous." Of course, those estimate were indeed just estimates, and they were also commented upon by HTC insiders at the time as being a little on the high side.

So, what do we take from Mr. Chou's statement? HTC is probably paying a royalty, but a $6-8 royalty (that's about 1-1.5% on a $600-800 smartphone)? Probably not. Who knows, it could be $3-5! Which, admittedly, would mean slashing the financial impact of the deal on HTC's coffers by up to half. But still, this is a small royalty to start with, especially given that Apple sought to arrange a patent licensing deal with Samsung back in 2010 at $30 per phone.

Patent royalties, by their nature, are usually assessed on a percentage of MSRP basis, with 1-2.5% being an extremely common range in the tech world. And let's not forget, not every smartphone HTC sells has a $600+ pricetag. In fact, probably well over half of HTC's smartphone sales are low-end and mid-range devices, meaning that the $6-8 number may not actually be wrong for a phone like, say, the One X+, or the DROID DNA. But phones like the One VX, Desire X, and One V may undercut that number through volume of sales.

Regardless, the terms of this settlement will likely remain out of the public eye for the foreseeable future (Samsung's request for them in its trial against Apple will be under seal and heavily redacted, most likely, if it's even granted), so we may not learn exactly how this deal went down until well after no one really cares anymore.

Reuters

David Ruddock
David's phone is whatever is currently sitting on his desk. He is an avid writer, and enjoys playing devil's advocate in editorials, and reviewing the latest phones and gadgets. He also doesn't usually write such boring sentences.

  • efan

    while i'd prefer this patent nonsense to cease all together, i do appreciate them coming to an agreement. whatever allows the devices to reach the market and not destroy the company in the process.

  • http://twitter.com/physicalist09 Physicalist

    The numbers are still baseless speculation. It is a cross licensing deal that means you can't operate with figures based on a one-sided deal.

    • http://www.androidpolice.com/ David Ruddock

      The figures aren't based on a one-sided deal. And you're assuming HTC's patents have much in the way of value, when they haven't won HTC a single court decision. Apple is, by far, the stronger party financially and in terms of IP firepower. Of course HTC is paying Apple - this is a two-sided deal only in the sense that Apple no longer has to worry about suits from HTC.

      • Andy_in_Indy

        Since HTC makes Windows Phones for Microsoft, they pay Microsoft to license IP for Android phones, and Microsoft has a cross licensing deal between themselves and Apple. It may be that Microsoft added some weight to the dispute, even if unintentionally. Of course, it is also in Microsofts' interest to have multiple manufacturers and losing HTC would hurt them.

  • http://twitter.com/Sandylls1 Sandylls

    Microsoft is the biggest patenttroll ever

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