Xbox 360 ban: Microsoft rejects Motorola settlement

[kanageddaamen]

Jereel Hunter said:

kanageddaamen said:

Jereel Hunter said:

kanageddaamen said:

Jereel Hunter said:

Turkish said:
If the Xbox 360 is banned in America, then its over and out for the system, leaving only the UK as a worthy market.

I do not hope for the ban, but MS shouldnt use patented software from others, if they do they should pay. Motoral has every right to claim for money.

No see, every company uses patents from everyone else - but motorola's demands are ridiculous, that's the point. Microsoft is willing to pay, but what Motorola wants is extortion.

Companies have a right to value their technology at what they feel is appropriate.  If MS doesn't want to pay, they have to either find another solution, or remove the feature from their product.  They can't just say "you are asking too much, so we are going to steal it"

Well, let's take a moment to consider how things work in the real world. First of all, you can't charge whatever you want.

http://en.wikipedia.org/wiki/Reasonable_and_non-discriminatory_licensing

Otherwise, a company with an absolutely critical patent could simply bankrupt it's competitors. Microsoft has numerous patents used in Android phones, but they only receive a few dollars(around 1%-2%) per phone sold.

But how do these patented things end up in their products? Well, you're an engineer, creating this hardware, and maybe you design a peice of a system that happens to be fairly similar to something Motorola has made - even though you made it, it's patent infringement, and it may not be discovered until later. Or maybe it's a critical decoding technology that you, as a designer include, knowing it's critical. Are you, the designer responsible for haggling over licensing rights? Nope, that's someone elses job. There could be a disconnect, or miscommunication, but in such complicated technology, there can be peices that are never dealt with via the proper channels. Then someone like Motorola finds out, and rather than doing what most businesses do ("Here's what this patent is worth, pay X"), motorola is going the extortion route ("It'd be a shame if you're system was to... you know... break... pay 20*X")

This doesn't fall into anti-trust behavior because motorla does not have OS or game  console prices.

This is also noa critical piece of the 360.  It is video decoding technology.  If you removed it, you would still have a game machine.  The patent use is to add features to the 360 to give it a competative advantage.  Take that away and the console does not cease to function.  They will simply lose the feature.  If they want to keep the feature, they must develop their own technology, or pay motorola.

Well, I never said anything about it being treated as anti-trust behavior. The link I posted up above - is a licensing standard than Motorola has agreed to. In short, it's not just to prevent monopolies, but to prevent a company from attempting to extort money with a non-major, but critical patent, as motorola is doing here.

The 360 is a media hub - more time is spent on it by people watching movies/TV than gaming. To remove it's video capabilities, it DOES cease to function. It's like removing a car's undercarriage and saying "you can store things in the trunk, raise and lower the windows, use the radio and AC - this car still functions."

And yes, they must pay motorola, but the point is, not what motorola is charging. Companies agree to a set of standards which don't permit them to do this - and they agree to this set of standards so it can't be done to them. The company wants what will amount to $4 Billion a year from MS - this is ridiculous. The "reasonable rate" is described in that article: "a reasonable licensing rate is a rate charged on licenses which would not result in an unreasonable aggregate rate if all licensees were charged a similar rate."

Now, Microsoft is a massivle profitable company. But consider most companies with it's revenue. They aren't pulling in profit margins like Microsoft. You add $4 Billion in licensing fees for relatively trivial reasons and  suddenly you have a company deep in the red, and facing financial disaster. They are charging this rate BECAUSE Microsoft can afford it, but the standards they are legally bound to adhere to require the pricing to be reasonable, not whatever they deem fit.

Even though I reject tha rgument that it "ceaces to function" and think your anaolgy is remarkably misguided (I would equate it to removing a trailer hitch from a truck.  The truck can't tow anything any more but you can still use it to get from place to place.) Lets run with it.

You are arguing that this technology is INTEGRAL to the success of the product, that it cannot function without it.  Motorola is asking 2.25% royalties for this absolutely essential function that would it be removed, make the product unusable.  That is not unreasonable at all.  Now I am not certain if this is retail or not, lets assume a nice round average of $350/console.  That is $7.88 for each console.  A pittance with what the video ability means from a profit standpoint for the 360

Lets look at a blu-ray player, which sony charges a $9.50 licesing free for regardless of price.  This is nearly 20% of the cost of a $50 product.  No one argues that is extortion.

Again, MS MUST pay for technology they use, and what Motorola is asking for is not unreasonable.