Android's dominance on the low-end of the smartphone market is likely hurting Microsoft's bottom line — at least where patent licensing is concerned.
In its most recent earnings release, Microsoft noted that its patent licensing revenue is down 26%. As noted by Business Insider, that drop is due to a combination of a market shift to the low-end in China and India, along with a lower overall cut of sales for Microsoft.
Microsoft's head of investor relations, Chris Suh, confirmed as much following the earnings release. From Business Insider:
Suh also noted that not every Android manufacturer has a licensing deal with Microsoft. He didn't name names, but Chinese phone makers typically take a very loose approach toward licensing American intellectual property, and as those inexpensive phones take over the world, Microsoft doesn't benefit as much.
While Microsoft's total patent licensing revenue from deals with Android manufacturers is likely small compared to its other businesses, the company was once reported to be netting around $2 billion per year in royalties.