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Apple's Royalty Payments to Nokia Estimated at $608 Million Up Front, ~$138 Million Per Quarter

Tuesday June 14, 2011 11:54 am PDT by Jordan Golson
Deutsche Bank analyst Kai Korschelt today estimated that Nokia will be receiving on the order of a 420 million euro ($608 million) lump-sum payment from Apple as part of a patent litigation settlement between the two companies.

The estimate, based on previous patent-related settlements in the industry, assumes a 1 percent royalty rate on all iPhones sold through the first quarter -- 110 million phones at an average selling price of $550. Korschelt also says that Apple would likely send Nokia recurring revenue payments covering future iPhone sales at the same rate, payments that would come in at around 95 million euros ($137.6 million) per quarter based on current sales, to cover ongoing licensing.

It's a significant sum for Nokia. The Finnish company is feeling tremendous pressure in the market as it abandons its old Symbian-based smartphone strategy and transitions to Microsoft's new Windows smartphone OS.

A report from Japanese analyst house Nomura, which got quite a bit of coverage yesterday, stated that the situation at Nokia was so poor that Samsung -- and perhaps even Apple -- would pass the Nokia in smartphone shipments this quarter. Of course, Nomura's numbers are based on an expectation of a massive drop in sales from Nokia as it transitions operating systems -- think the entire continent of Europe suddenly not buying Nokia phones -- plus a near doubling in smartphone sales by Samsung over the previous quarter. Samsung's mobile phones have been booming on the strength of Android, but that much growth in one quarter seems unlikely. Nokia is in trouble, but almost certainly not that much trouble.

Robert Cozza, mobile devices analyst at Gartner, poured water on Nomura's report, telling MacRumors:
In 1Q11 Nokia smartphone sales were double those of Samsung, so it seems optimistic to see this overtake in 2Q. If Nokia's new Symbian devices will fail with consumers over the next couple of quarters then we could see this overtake from Samsung on Nokia happening in 3Q.
MacRumors also spoke to Ramon Llamas at IDC about Nokia's chances:
Nokia is very fast at turning things around. They're currently in transition mode, and anytime you're going to be transitioning from the way things have been to the way things are going to be, it's not going to be without some series of dips in revenue.

Nokia has just provided the overall smartphone market with a gift: it's exposed itself and its vulnerabilities to everyone else. Lots of vendors are going to be able to turn up the heat.
And now Nokia gets to enjoy a little bit of the spoils from Apple's success as well. Time will tell if they can turn it around themselves.

Related roundups: iPhone 6, iPhone 6s (2015)
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OllyW
48 months ago

And NOKIA changed it's business from phoneindustry giant to patent trolling >.

Rating: 14 Votes
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samcraig
48 months ago

This should prop up their expected dismal (again) quarterly showing.

When your products suck ass because you were colossally negligent for nearly four years I guess you can live off royalties. Why not.



So LTD - you admit that Apple was in the wrong and Nokia was justified in suing and that winning the suit was legit?
Rating: 13 Votes
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wordoflife
48 months ago
Wow, that's a lot of money. (probably not for Apple anyways). Hope Nokia takes advantage of it.
Rating: 12 Votes
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samcraig
48 months ago
I'd say it's a major score for Nokia
Rating: 11 Votes
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ratzzo
48 months ago
And after all, Nokia IS competition for Apple. If they did this, it means Apple thought they would have lost a lot more money than that in court.
Rating: 9 Votes
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wikus
48 months ago

They do dumbphones ok. As long as the market for dumbphones remains viable, of course. If we were ever to see content-rich app-enabled phones the likes of Google's and Apple's approaching dumbphone prices, however, then Nokia will have even more problems. But by then their future will have been decided. What that future is we'll find out sometime in 2012.


I hope the partnership with M$ proves successful. I'd hate to have LTD's dreams of a monopoly market run by Apple. Corporate competition only makes the consumer the real winner.
Rating: 9 Votes
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Stratus Fear
48 months ago

Again, please don't make false statements.

Apple wasn't paying, they got sued. Even macrumors posted this;

http://www.macrumors.com/2009/10/22/nokia-files-iphone-related-suit-against-apple-regarding-wireless-patents/


http://www.macrumors.com/2009/12/11/apple-files-countersuit-against-nokia/

Update: According to the court filing posted by Digital Daily, Apple accuses Nokia of demanding unreasonable licensing terms, including reciprocal access to intellectual property owned by Apple, for a variety of its patents.

Through the present suit, Nokia has asserted unfounded claims of infringement and breached licensing commitments it made to license on F/RAND [Fair, Reasonable and Non-Discriminatory] terms all patents that it claimed were necessary for a party to practice standards. Nokia has also violated those licensing commitments by demanding unjustifiable royalties and reciprocal licenses to Apple's patents covering Apple's pioneering technology -- patents unrelated to any industry standard. This attempt by Nokia to leverage patents previously pledged to industry standards is an effort to free ride on the commercial success of Apple's innovative iPhone while avoiding liability for copying the iPhone and infringing Apple's patents.
Apple denies that any of Nokia's patents cited in its own lawsuit are "essential" to standards, but even if a court should rule any of the contested claims valid, Apple should be granted F/RAND licensing terms, which Nokia has refused to offer.


I don't purport to support anything LTD says, but you guys need to do some homework. Nokia's say in the dispute was that Apple didn't pay, yes, but Apple's reciprocal say in the dispute was indeed that Nokia wanted terms in violation of F/RAND commitments. I don't see how that was in any way a false statement as quoted.

Edit: I like how I got negged for posting factual information with links. That's rich.
Rating: 9 Votes
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Mattie Num Nums
48 months ago

This should prop up their expected dismal (again) quarterly showing.

When your products suck ass because you were colossally negligent for nearly four years I guess you can live off royalties. Why not.


Instead of making snide comments towards Nokia how about chiding your religion aka Apple for trying to STEAL from Nokia.
Rating: 9 Votes
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wikus
48 months ago

I don't mind competition, as long as it's competent.

There's already too much poorly designed, bad tech out there. Adding more doesn't help anyone.

I tend to laugh a little harder than most at the incompetence that's out there. Partly because for the most part, it's such a stark contrast to Apple.


You speak highly of competence, I'd imagine you'd be working for apple. But with competence comes rationale, something your pro-apple arguments lack because absolutely everything you'd said in this thread has been stunningly one-sided.
Rating: 9 Votes
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xIGmanIx
48 months ago
apple defending their IP and patents = fiesty apple setting the trends
other companies doing the same = patent trolling

Pretty much the foundation that is the iPhone owes itself to Nokia, and 3/4 of a billion dollars up front tells you others share that light. I don't think we really will know what Nokia and Apple truly disputed over but from what i have seen from Apple recently i would submit that Apple tried to get special treatment and not place nice

But karma is clearly a bitch, because of all the wagons to hitch their droopy star to they picked Microsoft's. Or rather, it was probably fate.

if the largest software company teeming up with the largest phone vendor on paper has the potential to be very successful. Greater pairings have failed surely, but considering neither of those are your companies i will give them a shot anyways
Rating: 8 Votes

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