Microsoft extends licensing program to hardware products

Microsoft Corp. has yet to reveal what it will charge for its new licencing initiatives around hardware technologies that were announced earlier this week.

Microsoft is targeting original equipment manufacturers for its first-ever hardware licence, which includes three of its mouse and keyboard technologies.

Microsoft’s “U2 technology,” for example, allows a computer peripheral device such as a mouse or keyboard to be connected to a computer using a PS2 or USB auto-sensing interface. Other technologies available under Microsoft’s hardware licence include “The Tilt Wheel,” which allows users to tilt the hardware component of mice and keyboards side to side and up and down and “The Magnifier,” which is a viewing and editing tool used with input devices such as a mouse that allows the user to magnify his computer screen.

“We’re targeting the people who are building their own products but could leverage our research and development in those three areas,” said Elana Zur, product manager, hardware, Microsoft Canada.

Peripherals manufacturers Targus Inc., Fellowes Inc., Acrox Technology Co. Ltd. and KYE Systems Corp. are all early licensees of the above technologies.

Microsoft currently spends US$6.1 billion annually on research and development, including software and hardware. Microsoft, however, is not particularly well known for its hardware innovation despite the fact it has been a desktop peripherals supplier for 20 years. This week’s announcement dates back to a promise Microsoft made in December 2003 to make its intellectual property portfolio broadly available for licensing to all interested parties.

While they won’t be licensing Microsoft’s hardware technology anytime soon, system builders here that sell Microsoft’s peripheral products say their customers usually opt for competing products offered by Logitech or other peripheral manufacturers. Logitech does not license any of its products to OEMs.

Superior Computer of London, Ont. said Logitech currently accounts for 90 per cent of its peripheral sales.

“We find we get a better price on the Logitech OEM product,” said Superior Computer’s general manager Shawn Wright. “We’ve been a little more active with Microsoft lately and we have bought more product.”

Wright said he makes between 15 to 25 points on peripherals — a healthy margin compared to traditional white boxes or white books, which are typically in the single digits.

Likewise, Frankie Wong, president of Elco Systems in Toronto, said Logitech is much more price-competitive than Microsoft.

“I don’t see it as any particular incentive for the system builders in price or technology-wise,” said Wong. “Logitech is the more popular one these days.”

But Microsoft Canada’s Zur said Microsoft’s decision to licence its hardware isn’t about increasing its footprint in the peripherals market.

“The purpose of giving out this technology isn’t to encourage more competition,” said Zur. “It’s to push the industry as a whole. We’re driving the category forward and not just ourselves.”

Despite its popularity several years ago, Microsoft currently doesn’t have plans to licence the technology behind its ergonomic keyboard.

“Our ergonomic keyboard is one of our innovations that is proprietary to us,” said Zur. “Right now we’re coming forward with these three technologies. Going forward we’ll have to evaluate what’s worthwhile.”

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