We should not draw conclusions on the enforceability of the patent by the out-of-court settlement. Microsoft is perfecly capable of doing so to give money to the patent holder in order to hurt its competition.

Patent squatting is based on the idea that settlement out of court is cheaper for the company being sued. Settlement doesn't mean much, period.

Settlement solves your problem. Litigating solves your competitor's too.

The decision depends on the expected return of the settlement, which depends on the expected return of the settlement money considered as an investment against the competition, compared to the estimated cost of litigation, which, in turn, depends on direct costs, odds of winning and estimated awarded costs in case of a loss.

I bet the settlement covered their next litigations.

A settlement may enable you to continue to conduct business, but it also may fuel nastier litigation against your competitors, furthering your own abilities while shielding you from future litigation.

Filing patent cases in Texas smells like a business method to me.

Step 1, file patent on it Step 2, prevent patent trolls from filing cases by "licensing" it for 110% of court winnings

Just as a note the patent holders have sued Microsoft already - MS settled out of court. (it does say so in the article but the title is a bit confused).