Samsung Electronics and Microsoft have recently restarted discussions to reach an amicable end to the recent patent dispute.
Samsung wants to keep Microsoft as a trustworthy client for cloud computing and "Internet of Things," while Microsoft needs Samsung to push its Windows mobile platform. Samsung is the world's top vendor of smartphones.
"The key point is that Microsoft wants to settle the lawsuit and it's no surprise to see that the two technology giants have resumed ‘working-level' discussions on how to dismiss lawsuits filed by Microsoft to a New York court," said an industry official by telephone, Sunday.
The official added the settlement would not take long because the main issue was how to renew terms of details such as royalty payments in return for using patents.
Samsung is being pressurized by royalty payments for Microsoft's 300 Android patents.
With its profit dropping, Samsung can't afford the payments at the current rate, forcing it to renegotiate with MS.
''While Microsoft acquired Nokia's handset division, the Finland-based Nokia was still passive to opening up its patents to the U.S. licensing giant. Because Microsoft failed to secure Nokia-owned patents, it will be very tough for Microsoft to produce handsets without Samsung-owned wireless patents. So it is likely that Samsung is asking Microsoft to renew contract terms. Microsoft is ready to accept the Samsung requests,'' said Lee Chang-hoon, a local patent attorney.
Samsung is paying ''billions of dollars'' as royalty, annually, for every Galaxy mobile devices it sells. That's a part of a ''patent-sharing agreement,'' the two companies agreed in 2011.
But the officials say Samsung is hoping to sign a ''comprehensive cross-licensing deal'' with Microsoft.
''Samsung earlier promised to team up with Microsoft to promote Windows platforms and Windows-embedded mobile devices. If the two settles the lawsuit, then Samsung may show more attention for the development of Windows-powered devices,'' said the official.
Since 2011, only a very few Windows smartphones and tablets are available in Korea.
Samsung declined to comment, while Microsoft Korea said it normally doesn't provide comments about client-related issues.
Microsoft insisted that Samsung failed to pay royalty on time last fall and is refusing to pay interest on the late payment.
Nomura Securities last year estimated that Microsoft generates more than $2 billion a year only on patent royalties related to devices powering on Google Android platform manufactured by Samsung Electronics, LG Electronics and Taiwan's HTC.
Reports have said Samsung is paying between $10 and $15 as royalty to Microsoft in each Samsung device.
Samsung shipped more than 310 smartphones last year, meaning that the Korean technology powerhouse spent at least $3 billion only for royalty to Microsoft, accounting for 10 percent out of annual net profit that Samsung reported in 2013.
''The global smartphone market is showing a sign of decline as the axis of smartphones has been shifted toward budget and cheaper models, putting Samsung's smartphone business into the corner. Also, the demand for conventional PCs is slumping, hitting the U.S. company. A new partnership will be needed. The Samsung-Microsoft legal battle is different from Samsung-Apple lawsuit,'' said Lee.
Samsung wants to keep Microsoft as a trustworthy client for cloud computing and "Internet of Things," while Microsoft needs Samsung to push its Windows mobile platform. Samsung is the world's top vendor of smartphones.
"The key point is that Microsoft wants to settle the lawsuit and it's no surprise to see that the two technology giants have resumed ‘working-level' discussions on how to dismiss lawsuits filed by Microsoft to a New York court," said an industry official by telephone, Sunday.
The official added the settlement would not take long because the main issue was how to renew terms of details such as royalty payments in return for using patents.
Samsung is being pressurized by royalty payments for Microsoft's 300 Android patents.
With its profit dropping, Samsung can't afford the payments at the current rate, forcing it to renegotiate with MS.
''While Microsoft acquired Nokia's handset division, the Finland-based Nokia was still passive to opening up its patents to the U.S. licensing giant. Because Microsoft failed to secure Nokia-owned patents, it will be very tough for Microsoft to produce handsets without Samsung-owned wireless patents. So it is likely that Samsung is asking Microsoft to renew contract terms. Microsoft is ready to accept the Samsung requests,'' said Lee Chang-hoon, a local patent attorney.
Samsung is paying ''billions of dollars'' as royalty, annually, for every Galaxy mobile devices it sells. That's a part of a ''patent-sharing agreement,'' the two companies agreed in 2011.
But the officials say Samsung is hoping to sign a ''comprehensive cross-licensing deal'' with Microsoft.
''Samsung earlier promised to team up with Microsoft to promote Windows platforms and Windows-embedded mobile devices. If the two settles the lawsuit, then Samsung may show more attention for the development of Windows-powered devices,'' said the official.
Since 2011, only a very few Windows smartphones and tablets are available in Korea.
Samsung declined to comment, while Microsoft Korea said it normally doesn't provide comments about client-related issues.
Microsoft insisted that Samsung failed to pay royalty on time last fall and is refusing to pay interest on the late payment.
Nomura Securities last year estimated that Microsoft generates more than $2 billion a year only on patent royalties related to devices powering on Google Android platform manufactured by Samsung Electronics, LG Electronics and Taiwan's HTC.
Reports have said Samsung is paying between $10 and $15 as royalty to Microsoft in each Samsung device.
Samsung shipped more than 310 smartphones last year, meaning that the Korean technology powerhouse spent at least $3 billion only for royalty to Microsoft, accounting for 10 percent out of annual net profit that Samsung reported in 2013.
''The global smartphone market is showing a sign of decline as the axis of smartphones has been shifted toward budget and cheaper models, putting Samsung's smartphone business into the corner. Also, the demand for conventional PCs is slumping, hitting the U.S. company. A new partnership will be needed. The Samsung-Microsoft legal battle is different from Samsung-Apple lawsuit,'' said Lee.
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