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

nokialogoDeutsche 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.

Top Rated Comments

OllyW Avatar
129 months ago
And NOKIA changed it's business from phoneindustry giant to patent trolling >.<

You obviously don't understand what patent trolling is. :rolleyes:
Score: 14 Votes (Like | Disagree)
samcraig Avatar
129 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?
Score: 13 Votes (Like | Disagree)
wordoflife Avatar
129 months ago
Wow, that's a lot of money. (probably not for Apple anyways). Hope Nokia takes advantage of it.
Score: 12 Votes (Like | Disagree)
samcraig Avatar
129 months ago
I'd say it's a major score for Nokia
Score: 11 Votes (Like | Disagree)
Stratus Fear Avatar
129 months ago
Again, please don't make false statements.

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

https://www.macrumors.com/2009/10/22/nokia-files-iphone-related-suit-against-apple-regarding-wireless-patents/
https://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.
Score: 9 Votes (Like | Disagree)
wikus Avatar
129 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.
Score: 9 Votes (Like | Disagree)

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