According to two Apple lawyers and an Intel executive, over one-fourth of the cost of a smartphone is tied directly to patent royalty fees. – Digital Trends

The paper, written by WilmerHale intellectual property litigators Joe Mueller and Tim Syrett and Intel Vice President and Associate General Counsel Ann Armstrong, used public information to calculate patent royalty costs. In their book titled The Smartphone Royalty Stack: Surveying Royalty Demands for the Components Within Modern Smartphones, it is noted how a consumer that buys a $400 smartphone will be paying about $120 in patent royalties, or 30% of the total cost.

So, that means that in some cases, the patent royalties meet or exceed the cost of the actual device hardware.

Last year, it was reported that Microsoft was generating $2 billion per year in revenue from Android patent royalties. In fact, if you take out the Android profits, Microsoft is likely losing around $2.5 billion on Skype, Xbox, and Windows Phone. Android handset makers pay between a reported $5 and $10 to Microsoft on every sold device.

Vox.com