They haven't actually been selling much. They patent-trolled google over some smartphone patents and won. Now they include the billions in revenue as "Windows Phone revenue". AFAIK they make more out of this patent trolling than from actually selling windows phones.
If the patents original disclosure was with mobile in mind then its fair enough to report it as windows phone revenue. It's not the type of win MS would want, but they did invest in the R&D
Unfortunately, that can not be known, since the patent list they use to extort Android device makers is still secret. When Barnes & Noble threatened to make it public, Microsoft settled and entered a billion dollar partnership (in which B&N did basically nothing)
I saw you got downvoted for another comment, but in general you've got the narrative right.
Microsoft sent a patent demand letter to B&N. B&N went public as part of its defense. Microsoft countered with two separate deals:
1) Settled the patent issue privately for a revenue-sharing deal and cash payment.
2) Microsoft committed to invest in the Nook business (called New Corp by B&N) which eventually led to Microsoft purchasing Nook for a premium.
So, while the immediate settlement was probably measured in hundreds of millions, the total outlay from Microsoft shareholders to B&N shareholders was close to 1 billion even though it was spread over multiple and disparate deals.
Prior to the patent letter neither company had a significant relationship.
It is extortion nevertheless. Or patent racket if you like. B&N described that behavior on their court hearings. MS is coming with threats, and says that no mater what you'll do, even if you'll try to refute some patents, they'll find others, so better pay up right away. It's a classic racketeer behavior, i.e. extortion. If you describe racket a "part of the business process", then it means that something is very seriously wrong there. And it's clear what is very wrong - the patent legal system is severely broken, leaving too many holes for such racketeers like MS.
No, it's really not. Pretty much all large patent portfolios get licensed this way, and always have been. There are a multitude of legal, technical, practical and business reasons, but that's how it goes.
It's just that some companies don't like to pay what's due, which is fine... It's their right and they can settle it in negotiations or in court. The problem is, due to the current media atmosphere that is conducive to inflammatory rhetoric because it garners rageviews, these companies now also like to complain loudly using words like "extortion", which the tech media eagerly parrot. And then others who don't like the licensor (or patents in general) pick up that rhetoric and run with it.
That's just one patent that got invalidated. And that required Google to identify one comment from more than a decade back to argue that the patent was obvious (rather than anticipated). All that to kill a single MS patent.
MS has hundreds, probably thousands of patents in their portfolio. A single patent makes negligible difference to the portfolio.
In addition, MS has prevailed in court with several other patents in many other jurisdictions, so clearly they have enforceable patents in their portfolio. That is why they can rightfully continue asking for licenses.
This is one of the "practical" problems of licensing large portfolios that I alluded to. The quality or fate of a single patent does not reflect on the entire portfolio. Conversely, invalidating each patent or valuing each patent is also incredibly complex.
There is an entire field of specialization for valuing portfolios. Calling it extortion is mostly the efforts of one side of the table to exert indirect pressure on the other
In any case, they settled for a negative value a lawsuit alleging B&N violated Microsoft patents. If that doesn't send a message about what those patents are, I can't imagine what would.
B&N gave them a stake in the eBook business for $300M. That's not nothing. That is an instant entry into the eBook business for Microsoft. Compare that to the huge amounts of time and money and legal fighting and publisher wrangling the other players (Amazon, Apple and Google) had to invest.
http://www.geekwire.com/2013/microsofts-newest-billiondollar...