Why Microsoft should kill Windows Mobile and go Android

World’s biggest software company, Microsoft, should be praying for the victory of Google’s Android operating system against its own ‘Windows Mobile’ OS, if numbers revealed by Citi ground analyst Walter Pritchard are anything to go by.

Against the $2 or so that companies like Microsoft charge for letting manufacturers put their product (Windows) on their models, Microsoft is getting a $5 per handset fee from Taiwanese manufacturer HTC. The irony is that this amount is paid by HTC for every ANDROID phone that it makes.

This makes sense when one considers that in case of Nokia, Microsoft has to pay the handset-maker (not the other way around) under a deal struck last year to put Windows Mobile on Nokia handsets.

HTC owes its genesis to Microsoft as the Taiwanese company, which was good at hardware but didn’t have any good software, was initially helped along by Microsoft with generous support. Microsoft also benefited a large deal from the partnership as, for several years, HTC was the biggest maker of smartphones based on Windows and one of the biggest smartphone makers in the World.

The deal soured around 2-3 years ago as even the hard core business consumers — the only category that ever bought Windows Mobile phones in large numbers — also started moving away to other platforms, including the iPhone. HTC was left in the lurch as it had invested most of its capability into designing its phones around Windows Mobile.

It was at that juncture that Google entered with its own operating system, after acquiring a small software maker. Unlike other OSes like Symbian and Windows, Google opted to reveal the code of its operating system, making it a free product. Unlike Microsoft, Google gets zero dollars from companies like HTC and Samsung who generously load their phones with Android.

Unsurprisingly, Microsoft, which at one time had more than 50% of the smart-phones run its software, saw its share dip to just 3.6% last quarter as Android is estimated to have grabbed around 40% of the market already.

All through, Peter Chou, the founder of HTC — one of the biggest Android phone makers — maintained that it was not biased towards either side and would, and did, continue to make Windows phones.

It was at this time that Microsoft announced that it wanted money from manufacturers who were putting Android on their phones — and more money, reportedly, than if they were to put Windows Mobile on it. Immediately, Microsoft announced that HTC has agreed to pay, though it did not say whether the payment was part of a larger quid-pro-quo or how much was being paid.

Bolstered by the agreement with its long-term friend HTC to pay for Android, Microsoft launched similar attacks against Motorola and Barnes & Noble (e-reader maker). Unlike its long time friend, Motorola and Barnes & Noble, of course, did not pay and dismissed Microsoft’s claims that Android was based on its technology as invalid.

If the Citi estimates are right, then Android is where Microsoft should be putting its money in, instead of trying to beat the system with Windows Mobile.

HTC which, along with Samsung, is the World’s top Android handset maker, has a substantial chunk (30%) of the Android market and has made around 30 million handsets on the Google platform, according to estimates. Put another way, nearly 120 million Android phones are expected to be sold this year, while only around 12 million Windows Mobile devices may be bought by consumers (unless Nokia manages to surprise everyone at the end of the year.)

As if that was not enough, Pritchard says Microsoft would like something around $10 per handset for every Android device.

Now, if only other vendors like Samsung and Motorola would only be willing to pay Microsoft for Android.