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

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Apr 12, 2001
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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.
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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.
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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.

Article Link: Apple's Royalty Payments to Nokia Estimated at $608 Million Up Front, ~$138 Million Per Quarter
 
Article Link
https://www.macrumors.com/2011/06/14/apples-royalty-payments-to-nokia-estimated/
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Wow, that's a lot of money. (probably not for Apple anyways). Hope Nokia takes advantage of it.
 
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.
 
Nice bit of change for Nokia. Perhaps not a bad deal for Apple either. This has the added bonus of propping up another competitor against Google. Not to mention some of the other manufacturers might also have to pony up to Nokia. This sets a price point which could be painful for smaller manufacturer's to keep up with.
 
ptysell said:
So what, $6 per iPhone sold plus another $1 per future iPhone?

When they get a similar deal from Google, well, I am not sure Android is generating that type of revenue for them.
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No, it will be the same $6 for every future iPhone.

MacRumors said:
Korschelt also says that Apple would likely send Nokia recurring revenue payments covering future iPhone sales at the same rate
Click to expand...
 
Will they invest it in R&D or pay to cover current shortfalls? Will the cash help them get back up to speed in the market or simply stay afloat as they fall behind?
 
fail

.
What a failure of management at Apple. They should have had their bases covered when they were designing the iPhone. Instead they took shortcuts and got called out on it. :rolleyes:
 
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.
 
ptysell said:
So what, $6 per iPhone sold plus another $1 per future iPhone?

When they get a similar deal from Google, well, I am not sure Android is generating that type of revenue for them.


Edit: Looks like Android is generating less than $6 in revenue per device for Google.
http://searchengineland.com/google-will-make-10-per-android-user-in-2012-report-64181

Throw Oracle on top of this and all of this should be fun.
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Google does not produce phones and therefore does not need to pay to Nokia but companies that do produces Android phones have been paying Nokia all along. That is one of the reasons why Android phones were less profitable but now the situation has changed.
 
Apple doesn't do something like this unless there is something in it for them. Yes, they could stand to loose a lot more in court, but if I were a gambling man, I'd say that they are actually gaining access to a lot more functionality, so maybe now we will see some more features on the iPhone that we always asked "I can't believe the iPhone doesn't do this"... Well now that Apple is paying the royalties, it possibly can..

One of those features could be the ability to snooze a calendar entry. ;) Amazing how both iPhone and Droid do not have that, my guess is either Nokia or HP (Palm) own the patent to that.

Edited: I stand corrected - RIM (Blackberry) owns the patent for "snoozing" a calendar entry, and they just applied for renewal of that patent in March of this year... ;)

http://www.google.com/patents?id=uD...urce=gbs_overview_r&cad=0#v=onepage&q&f=false
 
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juicedropsdeuce said:
.
What a failure of management at Apple. They should have had their bases covered when they were designing the iPhone. Instead they took shortcuts and got called out on it. :rolleyes:
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If the patent is required to operate a GSM phone, not really sure how they could have done anything else except pay Nokia eventually.
 
ptysell said:
If the patent is required to operate a GSM phone, not really sure how they could have done anything else except pay Nokia eventually.
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Exactly. In today's broken system, you cannot help stepping on someone's patents. So you pay to play. It's just like the mafia. Which is why it's a broken system. It's no longer about innovation, it's about paying up, buddy.
 
*LTD* said:
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.
Click to expand...


So LTD - you admit that Apple was in the wrong and Nokia was justified in suing and that winning the suit was legit?
 
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