Microsoft recently announced that they now have an agreement with Compal who makes 16% of the hardware for the Android powered smart phones. In short this agreement now means that a full 55% of hardware makers for Android phones now have an agreement with Microsoft.
Not only does Microsoft get a piece of the front end from a full 55% of the Android phone sales but, they also get a piece from more than half of the back end of sales too. With the heavy hitters in Android having an agreement with Microsoft (HTC, Samsung, Acer, etc..) they have 53% of the back end covered.
Bottom line here is if you have an Android phone in your pocket…Microsoft probably got a some money from your sale. They also have other agreements and litigation in the works as shown by this diagram.
One of Androids main draws to handset makers was that it was free (or close to it) with Microsoft’s taking profit at every step from these handset makers all of sudden free becomes expensive.
As Nokia and Microsoft push the Windows Phone cost lower and lower, the “cheap” Android phones cost more and more. This will not only drive more consumers to seriously look at a Windows Phone, it also forces handset makers to do the same thing. In a world of razor thin profit margins, a company can not afford to make less money on a product while at the same time giving your money to the competition.
In the near future almost all Android phones will be more expensive, (with the extra money going to Microsoft) Windows Phones will be cheaper, and almost every manufacture will be making Windows Phones as part of their agreement with Microsoft. Well played Microsoft, well played indeed!