Korean manufacturer to pay hundreds of millions of dollars in royalties for using Android software on smartphones and tablets

Samsung has agreed to pay Microsoft what could amount to hundreds of millions of dollars in royalties after it settled a bitter dispute over the Korean manufacturer's Android smartphones and tablets.

The technology giants announced an agreement on Wednesday about the use of Google's Android software.

Samsung will have to pay Microsoft a small fee – likely between $10 and $15 – for each Android smartphone or tablet computer it sells. Samsung has sold more than 10m Galaxy S II smartphones since its launch in May, meaning that the Asian phone maker could have to pay Microsoft royalty fees totaling $100m.

The settlement is the latest development in a smartphone market besieged by acrimonious legal battles over patent issues, most relating to the increasingly popular Android software. Microsoft won a similar licensing agreement with manufacturer HTC earlier this year, and has an ongoing dispute with Motorola Mobility. Google paid $12.5bn (£7.6bn) in cash to acquire Motorola Mobility in August, in a strategic move aimed to bolster the search giant's cache of patents.

"Microsoft and Samsung see the opportunity for dramatic growth in Windows Phone and we're investing to make that a reality," said the president of Microsoft's Windows Phone division, Andy Lees.

"Microsoft believes in a model where all our partners can grow and profit based on our platform."

The terms of the deal were not disclosed. It is not clear whether Samsung will have to pay Microsoft retrospective royalties, or whether the deal refers to devices sold from Wednesday onwards.

The agreement will also see Samsung cooperate in the development and marketing of Microsoft's Windows Phone software, which the manufacturer already offers with its Omnia range of phones.

Florian Mueller, an intellectual property analyst who has followed the case, suggested the settlement raised big questions for Google's Android partnerships with other manufacturers. "This is the most important Android-related intellectual property deal in its own right, and even more significant against the background of Google's proposed acquisition of Motorola Mobility," he said.

"If Samsung truly believed that Google's acquisition of Motorola Mobility was going to be helpful to the Android ecosystem at large, it would have waited until that deal is closed before concluding the license agreement with Microsoft. But Samsung probably knows it can't rely on Google. It decided to address Android's intellectual property issues on its own."

Google hit back at Microsoft with a punchy statement. A spokeswoman said: "This is the same tactic we've seen time and again from Microsoft. Failing to succeed in the smartphone market, they are resorting to legal measures to extort profit from others' achievements and hinder the pace of innovation. We remain focused on building new technology and supporting Android partners."