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Reportedly, Microsoft Makes $1.6 Billion Per Year on Android

February 10, 2014 - Written By Alexander Maxham

Some interesting, but not so surprising news coming out ZDNet over the weekend. We knew that Microsoft was making a bit of money off of Android, and that is what is keeping Windows Phone alive. According to a report from Nomura which is a financial services company, Microsoft is making a whooping $1.6 billion per year off of the Android platform. Which is about 5 times as much as they make off of Windows Phone.

What’s interesting here is that this cash is helping keep some of Microsoft Entertainment and Device Division projects like Skype and Windows Phone alive. Then there’s the Xbox which is losing about $2 billion per year. So if it weren’t for the royalties from Android, Microsoft’s EDD would be losing about $2.5 billion per year, largely thanks to Xbox.

According to Rick Sherland who is an analyst at Nomura, he assumes that Microsoft makes about $5 off of each Android device sold. With Microsoft having around 70% of the market covered with licensing deals. Sherlands numbers look like this, 122.5 million Android devices shipped by the September quarter in 2012, which brought in about $386 million for Microsoft. The June 2013 quarter, Microsoft raked in around $489 million. These figures are now suggesting that Microsoft made $1.6 billion from Android just in 2013. And the numbers are suggested to hit $1.73 billion in fiscal 2014 and $1.82 in fiscal 2015.

This probably isn’t surprising, but Android brings in more money than their own smartphone, Windows Phone. According to Sherlund’s numbers, Windows Phone generated about $3.3 billion in revenue in the 2013 fiscal year, but the gross profit was only $347 million. Which is just under a quarter of what Android brings home for Microsoft. While Microsoft has never openly discussed the exact financial details of their royalties, they have openly said that just about every OEM and ODM have a licensing deal with the tech giant. So obviously they are getting paid from it.

How many of you are surprised that Android is helping keep Microsoft’s divisions like Skype, Xbox and Windows phone Afloat? Let us know in the comments below.