What were the terms of the Apple-HTC settlement? - Fortune

The HTC phone that started it all

FORTUNE -- In Oct. 2010, Apple (AAPL) offered to license its portfolio of smartphone patents to a major Android phone manufacturer for $30 per unit -- a figure it said it was willing to reduce to $24 as part of a patent cross-licensing deal.

On Saturday, Apple announced that it had signed a 10-year cross-licensing deal -- the terms of which are confidential -- with a second Android phone maker.

The first company was Samsung, which chose instead to take its chances in a California jury trial that resulted in a $1.05 billion judgement it is currently fighting to reduce.

The second was HTC, which for several reasons was more inclined to cut a deal with Apple:

• Unlike Samsung, whose smartphone sales have overtaken the iPhone, HTC's share of the global smartphone market have been shrinking rapidly (to 4% last quarter from 10.3% in the same quarter last year, according to IDC)
• Its revenue and profits have fallen four quarters in a row
• It already lost one patent fight with Apple at the U.S. International Trade Commission (ITC), leading to a temporary ban on the sale in the U.S. of two of its newest phones
• It lost a high-profile countersuit, suggesting that the $300 million it spent on a portfolio of patents to gain leverage against Apple might have been wasted
• A preliminary ruling in yet another Apple lawsuit was due from the ITC in two weeks

Apple, for its part, has made it clear that it prefers settlements to the wave of lawsuits Steve Jobs initiated and which Tim Cook has described as a "pain in the ass." HTC no longer poses the threat it did when Apple first sued it in March 2010. Although Jobs complained bitterly at the time that the company was "steal[ing] our patented inventions," HTC's imitations were never as brazen -- or well documented -- as Samsung's.

Although neither side will say what there terms of the deal struck Saturday were, an HTC spokeswoman told the Wall Street Journal that the company doesn't expect the license agreement to have an "adverse material impact."

We can probably assume that Apple settled for something less than the $24 per unit it demanded of Samsung. According to IDC, HTC sold 7.4 million smartphones last quarter. At $24 per phone, that would have worked out to nearly $180 million.

I'm not an accountant, but for a company that warned two weeks ago that fourth quarter revenues are going to come in at $60 billion -- down 14.5% from last year's $70.5 billion -- $180 million sounds pretty material to me.

Unless, that is, HTC is planning to shift its smartphone efforts from Google's (GOOG) Android platform and to someone else's -- say, Microsoft's (MSFT).