What percent of a smarthone’s price comes from patent royalties?

You hear about patent disputes all the time. All the major companies are suing each other, with Apple and Samsung being the most vocal examples the past years. But does that drive prices up for smartphones, or down?

The results are somewhat shocking: almost 25% of the current price of a smart phone is tied to patent royalty fees. Here’s an excerpt from the article over at Android Authority:

The paper, written by WilmerHale intellectual property litigators Joe Mueller and Tim Syrett and Intel Vice President and Associate General Counsel Ann Armstrong, used public information to calculate patent royalty costs. In their book titled The Smartphone Royalty Stack: Surveying Royalty Demands for the Components Within Modern Smartphones, it is noted how a consumer that buys a $400 smartphone will be paying about $120 in patent royalties, or 30% of the total cost.

So, that means that in some cases, the patent royalties meet or exceed the cost of the actual device hardware.

Last year, it was reported that Microsoft was generating $2 billion per year in revenue from Android patent royalties. In fact, if you take out the Android profits, Microsoft is likely losing around $2.5 billion on Skype, Xbox, and Windows Phone. Android handset makers pay between a reported $5 and $10 to Microsoft on every sold device.

Head over to the site to read the rest of it.