Immersion to pay Microsoft $21 million, Sony groans

Immersion, the company that owns virtually every vibration and haptic tech on earth, is getting a taste of its own medicine now that it owes Microsoft $21 million. You may remember back in 2003 when Microsoft floated an unknown sum of cash in the direction of Immersion in order to include patented vibration technology in its Xbox 360 controllers. Around the same time, Sony told us all that we don't need no stinkin' vibration and passed on paying up. Last year, though, Sony bowed to customer pressure and paid Immersion $121 million in order to unleash the Dual Shock 3. Immersion was supposed to share some of that Sony booty with Microsoft -- and they didn't. So there we have it: we all got a piece of Sony and we have the DualShock 3. Everyone happy now?

[Tony C @ Aug 27th 2008 10:38AM]

So lame. Sony indirectly pays Microsoft so they can have DualShock 3 that shoulda been there in the first place.

[Al2x @ Aug 27th 2008 11:01AM]

It was Sony's own stupid decision. IMHO, it was the worst decision this gen, right next to the Wii not in HD.

[Richard @ Aug 27th 2008 11:18AM]

Forget the Wii not being HD, the Wii NEEDED an HD. How do you offer downloads without providing a hard drive option?

[Eric M. @ Aug 27th 2008 11:38AM]

@Richard

FYI, I'm pretty sure Al2x meant "HD" as in High Definition, so he's upset that the Wii isn't in High Definition. But I believe you are trying to use "HD" as Hard Drive, but the abbrivation for Hard Drive is "HDD" as in Hard Disk Drive, just for future reference.

[Monkeydog @ Aug 27th 2008 12:01PM]

@Eric M.

It's obvious Richard knew he meant High Definition, he just used that second HD to mean hard drive. His first HD still means High Definition, if you read it right.

[Mark @ Aug 27th 2008 12:30PM]

@Al2x

Worst decision this gen? Give it up. Sony could have paid $21m when Microsoft did, they chose not too, and ended up paying $121m ($100m difference).

The biggest mistake, was Microsoft blowing $1.2billion by shipping shoddy hardware...

[why not the LS2LS7? @ Aug 27th 2008 12:35PM]

Mark:
MS didn't pay $21M. Immersion paid MS $21M.

The amount that MS paid Immersion is unspecified in the article.

Even if MS paid $21M (they likely didn't), Sony would have had to pay a lot more (perhaps triple) because there were so many more Sony rumble controllers out there in the world than MS ones.

Additionally, whatever MS paid up front is in addition to any royalties they pay per-controller. So in essence, by paying 3 years layer, more of those royalties got rolled into the up-front cost ($121M). So, depending on the royalty rate, Sony may actually have ended up paying less per controller than MS.

It's a shame anyone paid Immersion. They're just patent trolls.

[Richard @ Aug 27th 2008 3:38PM]

@ Eric

Yeah, it was a play on abbreviations.

[John @ Aug 27th 2008 10:39AM]

I think that the higher ups at Immersion just really like round numbers. I can picture the board meeting: "Gentlemen, we have $121,000,000. We need to find a way to make that a nicer looking number. Who can we give the money to?"

[rndmnme @ Aug 27th 2008 11:38AM]

Yes. Immersion is run by Monk.

[Rainier @ Aug 27th 2008 12:19PM]

It's a jungle out there.....

[IndiaTech @ Aug 27th 2008 1:29PM]

You know, it's the corporates that we are talking about here? Immersion would have sued some poor dildo making company to make the figure round rather than pay a dime.

[Flashpoint @ Aug 27th 2008 10:43AM]

SONY is a multi billion dollar empire. I sincerely doubt that their loss to Immersion hurt them immensely. Besides, just like any corporation, the price they ended up paying will be passed onto the consumer in the form of more expensive accessories, expensive software and expensive electronic devices in the walkman line.

I knew from the beggining that a vibration-less PS3 controller - with no access to the PS2 controller - was never gonna fly. I don't think the lack of vibration kept anyone from buying their PS3 though. I'm just glad I waited until now to buy one because when the PS3 hit $400 witht he 40GB HDD, it had lost all of its soul. No Backwards Compatibility, no memory card drives and no shock. Now I can get an 80GB or higher and buy the shock controller.

[My Ipod beats your computer @ Aug 27th 2008 10:54AM]

multi billon dollor empire? ...
You do realize they don't make money on the ps3 right? They have lost billions of dollors cuz it costs so mch to make. Ouch

[melloncollie @ Aug 27th 2008 10:55AM]

You realize, there are different divisions in Sony that have some sort of set budget, right?
While it may not hurt Sony on the whole, it might've hurt that department/division.

[Uchiha Sasuke @ Aug 27th 2008 11:14AM]

Um, Ever heard of the PS2, where Sony sold atleast to an upward of 70 miliion units worldwide. Yep, tapping the moneybank.

[Chris @ Aug 27th 2008 11:35AM]

The PS2 money is gone.

Playstation is firmly in the red.

[Heinz @ Aug 27th 2008 11:39AM]

Ever hear of the recent article that said that they lost more money on the PS3 then they made on the PS2 so far? You just got served. Everybody look, this sucker just got served!

[ipubs bastard child @ Aug 27th 2008 11:41AM]

At the time it was reported that sony entertainment, ie the gaming division had an annual operating profit (not income) was little over $400 mil. Therefore they lost more than one quarter of that income. So yes, it did hurt them.

[Eric M. @ Aug 27th 2008 11:57AM]

@Chris

Don't spread your misinformation, last quarter Sony's gaming division, AKA the Playstation family, was in the black with a profit around 50 million.

http://www.joystiq.com/2008/07/29/sony-profits-dip-games-division-way-up/

[why not the LS2LS7? @ Aug 27th 2008 12:37PM]

Chris, that article was misleading. It says PS3 has lost more on hardware than PS2 made on hardware.

Most of the money in consoles is in royalty fees (per game sold) and accessories. The hardware itself isn't part of the moneymaking strategy (except for Wii).

[james @ Aug 27th 2008 10:43AM]

$121 million for a little vibration? Seriously?

[Flashpoint @ Aug 27th 2008 10:45AM]

After lawyer fees, taxes, government fees, court fees and handling fees (as well as applicable surcharges) Immersion made it out with a cool $45.

[STIEN @ Aug 27th 2008 10:48AM]

las year? FIX IT! bob the builder can help

[Ross @ Aug 27th 2008 12:26PM]

WTF?!?

[1stJunglist @ Aug 27th 2008 10:50AM]

So wait, Microsoft pays for this tech from Immersion, Sony pays for this same tech later on, Immersion then turns around and gives MS it's money back??? WTF? Did I read the article wrong?

[Tonicboy @ Aug 27th 2008 10:57AM]

Yeah I'm not getting it either. Sounds like Immersion sued MS and apparently had some ground because they settled out of court, but then MS had some issue with that settlement such that they counter-sued Immersion and won an agreement from them that they would get part of Sony's license fees if/when that happened.

So, the part I don't get is, if MS was in the fault enough to have to settle originally, what possible grounds could they have with the settlement where they could get that kind of concession from Immersion?

[Mike K @ Aug 27th 2008 10:57AM]

@1stJunglist:

Perhaps MS said something along the lines of

"Well you know that if we pay you for this, it sort of validates your lawsuit for everyone else, and that should be worth something to you..."

Or perhaps I'm to negative.

[Mez Jr @ Aug 27th 2008 11:41AM]

If all on here is correct then here's the explanation:
http://en.wikipedia.org/wiki/Immersion_Corporation

If you don't want to click off, summary:
In 1997, Immersion worked with Microsoft to integrate their Immersion TouchSense technology into Microsoft's DirectInput API for DirectX 5.0.[3] Microsoft and Immersion continued to work together on DirectX 6 and 7,[4] and signed an agreement in 1999 to share each other's "feel simulation technology".

So, apparently they share some patents, if Sony violated jointly held patents then MS deserves a cut.

[SteveJr_Ri @ Oct 29th 2008 4:42PM]

makes me wonder if because sony uses technology that lets you feel with the controller as well as control by motion. Sounds like that could be where Sony and MS differ. But your right about them sharing profits, but I'm sure with sony's sixasis mixed with vibration has something to do with the payout

[IndiaTech @ Aug 27th 2008 1:31PM]

Feel Simulation Technology... Sounds dirty.

[sr @ Aug 27th 2008 11:01AM]

Sony money going to MS? Sounds like music to my ears. As much as don't like MS, I dislike Sony even more.

[Ross @ Aug 27th 2008 12:27PM]

I second that!

[Abuzar Baloach @ Aug 27th 2008 3:16PM]

Sony is floundering in the dark red water that is debt. You want more competition. I personally like the Xbox 360 better but I would HATE to see Sony get out of the video games industry. Let's just hope they all make decent amounts of money so they can keep on delivering. Except for Nintendo. They need to get their shit together and release some REAL games.

[tekdroid @ Aug 27th 2008 11:04AM]

how Microsoft gets a cut of any of this action is beyond me, but they must have genius negotiatiors and/or Immersion must have been pretty desperate once upon a time.

[Neal @ Aug 27th 2008 11:07AM]

More info here:

http://news.moneycentral.msn.com/ticker/article.aspx?Feed=AP&Date=20080826&ID=9069674&Symbol=MSFT

When MS agreed to settle with Immersion, a clause was signed that if they won against Sony, they had to pay XX amount and a % if they got anything over 100 million. It's basically what Mike K said. "If we settle, it means we both save money on lawsuits, and gives you a legal precidence on which to sue Sony and make it likely to stick. For doing this, we want something in return."

Immersion said ok to this, so while MS paid them $26 mill up front to settls, they got almost all that back. Good legal maneuvering in my book.

[Chrisvanren @ Aug 27th 2008 11:19AM]

Cool, that clears it up a little. Thanks

@ Joshua Fruhlinger. I know this is a blog, but learn how to write an article. Not all of us can decipher you attempts @ being witty.

[ngamer007 @ Aug 27th 2008 11:15AM]

That's so shady, that's why I love Microsoft. Thinking ahead.

[Neal @ Aug 27th 2008 11:18AM]

What's shady about it? They said they would settle on the condition of this contract, which Immersion apparently thought was a good deal and agreed to sign. I call it a good deal for everyone but Sony - Immersion saved legal costs on a battle with MS, got a legal precidence which likely helped or possibly lead directly to the victory over Sony, and made money off MS and Sony in the process. Sure MS got most of their money back, but they helped Immersion too.

[Ike Turner @ Aug 27th 2008 11:13AM]

Balmmer just pimp slapped Sony. Jobs' the next on his hit list. Beware of the flying chairs!
Hold on Gates already pimped Apple once in 1997.... http://www.youtube.com/watch?v=WxOp5mBY9IY

[TheCow5 @ Aug 27th 2008 12:03PM]

Thanks, that video is the best.
now to send it to all my apple loving friends lol this should be funny.

[B @ Aug 28th 2008 11:12AM]

I will refer this video whenever one of the Mac vs Vista commercials comes on...

[ArtVandelay @ Aug 27th 2008 11:23AM]

I can clear up the confusion on this, Immersion, Inc. is basically a classic patent troll. They had a broad patent on haptic tech. They sued Sony and Microsoft in 2002 for the dualshock tech that was released in 1997 (in japan).

The patent was very, very broad and had Sony and MS fought it they could have easily won. Instead MS decided to bribe...cough...settle with immersion for 26 million and a stake in the company provided that if they got a settlement from Sony MS would get a cut. Sounding fishy yet...let me simplify

MS basically financed immersion and this court case to:

#1 deter Sony from using the tech, because they knew Sony would fight the lawsuit since the patent was so flimsy (mission accomplished)

#2 So if and when Sony settled they'd recoup their cash and still reap the benefits of Sony's lack of rumble (mission accomplished)

smart move by MS...yes...dirty move by MS...yes...business as usual in corporate america...absolutely.

[Ludovic @ Aug 27th 2008 1:36PM]

Yeah, I don't see how anyone here can think that this lawsuit was a good thing for gaming.

The customers had less choices of hardware, people burned countless hours working on this, Sony and Microsoft wasted a bunch of money ("only" 5 million dollars for Microsoft? How is that small?) that could have been spent elsewhere. All of this so that a couple of losers win a hundred million doing nothing.

Fight the power breda!

[tekdroid @ Aug 27th 2008 11:06PM]

The way you put it makes sense to me. The 'weakening the competition' angle for (presumably) next to no cost sure sounds about right. Dirty business for sure.

[Cameron Stevens @ Aug 27th 2008 12:14PM]

Maybe this infusion will make XBOX360's nextgen even better, but it really doesn't matter. It's a lesson through hindsight for Sony. That said, the patent lawsuits are really discouraging to the whole industry, when will it collapse so laws based on some intelligence can be brought forth?

[Mark @ Aug 27th 2008 11:29AM]

Hooray for MS, they now have some money to invest in making the 360 reliable. Oh no wait, that would take billions.

[Snuffdog @ Aug 27th 2008 11:33AM]

It was good decision for Immersion they made with MS. they made out with 105mil. got 26mil gave back 21mil to MS and they got 100mil from Sony and 5 from MS. they can't be that stupid!!!

[V Langs @ Aug 28th 2008 5:41PM]

see, this is why microsoft is so freaking rich...

even when they have to pay money in settlements, they find ways to make people pay them back.

it's like they gave immersion a loan.

i don't really like microsoft windows products, but i do like xbox.

and i have to say, they have brilliant lawyers/high ups

[Dan @ Aug 27th 2008 11:34AM]

Who knew you could be f**ck%d by a vibrator?


I turn the feature off, it's annoying.