Apple's annual developer conference in San Francisco.
Apple's Royalty Payments to Nokia Estimated at $608 Million Up Front, ~$138 Million Per Quarter
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.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.
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.