Microsoft Sues Motorola Over Smartphone OS

Microsoft (NASDAQ: MSFT) announced at the end of last week that it  would finally be pulling back the curtain on its new mobile operating system, Windows Phone 7. On Oct. 11, the house that Bill Gates built will refresh its strategy to compete with Apple’s (NASDAQ: AAPL) iPhone after three years of watching Windows Mobile 6 lose momentum and support from numerous mobile phone manufacturers. Apple’s smart phone  isn’t the only obstacle between Microsoft and smartphone success, though. While Windows Phone 7 hasn’t even had its official debut yet, the war between Microsoft’s new platform and Google’s (NASDAQ: GOOG) Android mobile operating system is already getting ugly.

Within 24 hours of announcing its upcoming event for Windows Phone 7, Microsoft filed an action with the International Trade Commission and the United States District Court for the Western District of Washington against Motorola (NYSE: MOT). According to Microsoft, Motorola’s Google Android-powered line of Droid smartphones infringe on nine Microsoft patents. Horacio Gutierrez, Microsoft’s corporate vice president and deputy general counsel, published a statement explaining what exactly Motorola’s Droid phones have illegally co-opted from Microsoft’s patented technology. The patents in question relate to syncing software, specifically programs relating to smartphone users’ contact lists, calendars, and e-mail accounts and syncing user information from devices and services on smartphones. Gutierrez specifically mentions Microsoft’s Exchange ActiveSync software and says that the Microsoft patents infringed on are for fundamental technologies that “make smartphones ‘smart.’ ” He goes on to say that Microsoft is justified in taking legal action to protect their property, citing similar suits filed by Apple and Oracle (NASDAQ: ORCL). Apple filed a suit against mobile phone manufacturer HTC last March citing patent infringments in the company’s Android-powered phones. In August, Oracle filed a suit directly against Google, saying that Android’s use of the Oracle-owned Java programming language infringed on a number of the company’s patents.

There’s no doubt that Microsoft holds a significant number of patents that describe technology inherent in modern smartphone design. The company was one of the earliest manufacturers of smartphones, its line of Windows Pocket PCs sitting alongside other early models like Nokia’s (NYSE: NOK) Symbian 1-powered Nokia Communicator phones and Research in Motion’s (NASDAQ: RIMM) early BlackBerry devices. It’s telling, though, that it’s only now, when Microsoft is about to pour $500 million into helping Windows Phone 7 wrench away market share from operating systems made by Apple, RIM, Symbian, and Google, that it has moved against Motorola. The technologies described by Gutierrez were incorporated in older versions of the Windows Mobile operating system, so why go after Android now? Is it simply following the lead of Apple and Oracle, seeing a chance to weaken Google by slowing the development and release of Gingerbread and Honeycomb, Google’s planned major upgrades to the Android OS? Is this a move to spite Motorola for delaying its support for Windows Phone 7 due to the platform’s lack of compatibility with CDMA mobile phones?

Investors following the smartphone market should prepare themselves for more lawsuits to be filed as the North American smartphone market gets more and more crowded over the next year. Whether or not the ITC will rule in favor of Microsoft remains to be seen. Google has maintained that Android infringes on no copyrights, calling Oracle’s August filing against the company “baseless.” If Motorola settles with Microsoft, though, Google shareholders should brace themselves for an interruption of Android’s rise to the top of the smartphone heap.

Microsoft will unveil Windows Phone 7 on Oct. 11. AT&T (NYSE: T) will be exclusively supporting the Windows Phone 7-powerd Cetus from Samsung, the Optimus 7 from LG Electronics and the HTC Spark and Mondrian phones on Nov. 8.

As of this writing, Anthony Agnello did not own a position in any of the stocks named here.

Sam Collins  Daily Trader’s Alert — Yours FREE!  In each issue, InvestorPlace’s Chief Technical Analyst Sam Collins gives you his take on what’s slated to impact your portfolio during the trading day. It also includes Sam’s Trade of the Day — his daily stock or ETF pick complete with chart and trading target. Daily Trader’s Alert is yours free, sent right to your e-mail inbox each trading day before the market open. Click here to get started now.


Article printed from InvestorPlace Media, https://investorplace.com/2010/10/microsoft-sues-motorola-over-google-ndroid-smart-phone/.

©2024 InvestorPlace Media, LLC