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Oracle win would strain Android growth

Oracle is reportedly already asking handset makers to pay as much as $20 per Android phone

By Nancy Gohring, IDG News Service
July 07, 2011 01:19 PM ET

IDG News Service - Will handset makers maintain their dedication to Android if they have to pay to license it? That's the question experts following Google's battle with Oracle are asking, and some of them think the answer is no.

If Oracle wins the lawsuit that it brought against the software giant, the consequences for Google and the entire Android market could be dire, analysts say. Oracle likely won't settle for a lump payment but instead will want a cut of each phone sold. That added cost changes the economics for handset makers such that many will take a second look at their commitments to the Android platform.

While manufacturers are unlikely to abandon Android for a couple dollars per handset, they might begin to find other platforms, like Windows Phone, more attractive and begin to reduce the number of Android phones they make in favor of other platforms.

The dispute started last year when Oracle sued Google for patent and copyright infringement in Android. Oracle alleges that Google's Dalvik virtual machine, which runs Java applications on Android devices, uses technology developed by Sun Microsystems without a license. Last year, Oracle closed its acquisition of Sun.

"Based on what I've seen up until this point, I think Oracle is very much in a strong position," said Dave Mixon, a lawyer with Bradley Arant Boult Cummings LLP, who has been closely following the case. In an early hearing that typically sets the tone for patent disputes, the judge favored Oracle.

With Google on the defensive, Oracle is keeping the pressure on. "Oracle is taking an aggressive stance with this in that they understand the perception is that they've put Google back on their heels and that they may be on the verge of winning," Mixon said.

One way that Oracle may be trying hard to push its case forward is by reportedly directly asking handset makers to license its software -- for US$15 or $20 a handset. Oracle is approaching the major OEMs and inviting them to join an early adopters program under which they agree to license the technology directly from Oracle, according to Jonathan Goldberg, an analyst with Deutsche Bank.

Oracle declined comment on whether it is asking handset makers to license its technology and did not comment further for this story. Google did not reply to requests for comment.

That licensing cost would make using Android comparable to the cost of licensing Windows Phone 7, Goldberg said. Microsoft often points out that while Android is technically free, OEMs must fund related work necessary to integrate the software onto their hardware. With Windows Phone, Microsoft includes support services that help hardware vendors do that as part of the licensing fee.

"Handset makers are going to have to think long and hard about staying on Android," said Jack Gold, an analyst with J. Gold Associates. "Because why are they on Android? Because it's free and it's modifiable. If you start changing the terms, handset makers have to start looking at the business proposition." While handset makers likely wouldn't abandon Android altogether, they would think about how heavily they rely on it.

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