Expect Microsoft to get royalties from Amazon's Kindle Fire

One of the surprise winners in today's announcement of the Kindle Fire should be Microsoft, which can expect to get significant royalties from what will likely be a hot-selling tablet. Microsoft has gone after other manufacturers of Android devices, and signed royalty agreements with them, including a deal today with Samsung. Expect one with Amazon to follow.

On the same day that Amazon unveiled the Android-based Kindle Fire, Microsoft announced that it had signed a patent agreement with Samsung, in which Microsoft will get royalties from all Samsung Android-based tablets and smartphones.

That means that Microsoft has now signed similar deals with every major manufacturer of Android devices in the U.S. save one --- Motorola. Since Motorola is being bought by Google, don't expect any deal to be signed. That one is headed for the courts.

These royalty deals are essentially free money for Microsoft, and big money as well. In May, Citi analyst Walter Pritchard said in a report that Microsoft makes more money from these Android licensing deals than it does from Windows Phone 7. By his calculations, Microsoft has received $150 million from HTC alone, based on 30 million Android smartphones sold by HTC, and $5 per phone payments to Microsoft. Even for Microsoft, $150 million isn't chump change, and that's just from a single manufacturer. And Microsoft doesn't need to spend any money to get that $150 million, it just needs to cash a check. Sales of the Amazon Fire will likely be in the tens of millions a year, and so Microsoft could reap similar amounts of money from Amazon if a deal was signed.

Amazon and Microsoft signed a patent deal last year that covered the Kindle as well as the way in which Amazon uses Linux-based servers. It doesn't appear to cover Android, though. Given that Microsoft has sued other makers of Android devices, and that big money is at stake for the company, expect a similar deal to be signed with Amazon. Amazon has shown it would rather pay Microsoft than slog through a suit.