Microsoft continues to build IP licensing portfolio

Microsoft continues to build IP licensing portfolio

Microsoft is licensing three technologies associated with its mouse products to third parties in an effort to grow its IP licensing revenue.

In a continued effort to derive revenue from licensing patented technology, Microsoft plans to let third parties license intellectual property (IP) it developed for its own mouse products.

Microsoft would open up licensing for three technologies -- Tilt Wheel, U2 and Magnifier, a director of business development for Microsoft, David Kaefer, said. It marked the first time the company was licensing patents for hardware technology, he said.

Tilt Wheel is mouse technology that allows a user to scroll not only up and down but also horizontally with a mouse's flywheel. U2 allows a mouse or other peripheral device be immediately recognized by a computer's port even if the port it is using is not native to the device. For example, if a USB device has to use a PS/2 port by using an adapter, the technology will allow the peripheral to work seamlessly without needing any extra software on the hardware device to which it is attached. Magnifier allows a cursor on a screen controlled by a mouse to immediately magnify parts of the screen with one click.

Tilt Wheel and U2 will be licensed to users for $US0.30 and $US0.35 a unit, respectively.

Microsoft had not decided on the pricing for Magnifier yet, but it will likely be similar to that of Tilt Wheel and U2, Kaefer said.

Microsoft had offered mice that include Tilt Wheel and Magnifier for only about a year, he said.

U2 has been around longer than that and already other companies have built similar competing technologies into their products.

Microsoft thought it was the right time to begin licensing all three technologies before other companies build their own to compete with them, he said. In this way, the company could begin making money every time another vendor sells hardware using its patented technology.

Licensing patented technology to third parties is a fairly new practice for Microsoft. In 2003, the company hired Marshall Phelps, the mastermind behind IBM's patent-licensing program, to lead its IP Licensing Group, hoping to follow IBM's success in making money from charging third parties to use technology it has patented.

IBM has earned the most patents of any company worldwide for 13 years running. According to its 2005 financial statement, the company that year earned nearly $US367 million in royalty-based licensing fees and $US236 million in sales and other transfers of IP.

Principal analyst for the Enderle Group, Rob Enderle, said Microsoft was interested in seeing its own patent-licensing business grow not only to make more money, but also to have a hand in directing future uses for products that use its IP.

"Microsoft has learned over time that license revenue goes straight to the bottom line and has virtually no risk associated with it," he said. "More importantly, if what you license is broadly used, it gives you substantial say on the direction of future offerings that use your stuff."

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