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

Discussion in ' News Discussion' started by MacRumors, Jun 14, 2011.

  1. MacRumors, Jun 14, 2011
    Last edited by a moderator: Jun 14, 2011

    MacRumors macrumors bot


    Apr 12, 2001


    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:
    MacRumors also spoke to Ramon Llamas at IDC about Nokia's chances:
    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
  2. wordoflife macrumors 604


    Jul 6, 2009
    Wow, that's a lot of money. (probably not for Apple anyways). Hope Nokia takes advantage of it.
  3. samcraig macrumors P6

    Jun 22, 2009
  4. ghostlyorb macrumors 6502a


    Jan 9, 2010
    Virginia, USA
  5. ratzzo macrumors 6502a


    Apr 20, 2011
    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.
  6. ThisIsNotMe macrumors 68000

    Aug 11, 2008
  7. jonnysods macrumors 601


    Sep 20, 2006
    There & Back Again
  8. FrizzleFryBen macrumors 6502

    Dec 14, 2009
    Charlotte, NC
    Can I get a source? Does this go back to the Ma-Bell days and rotary phones? Too vague to offer estimates as even close to accurate. Unless I missed something crucial.
  9. HiRez macrumors 603


    Jan 6, 2004
    Western US
  10. archipellago macrumors 65816

    Aug 16, 2008
    well done Nokia...deserved.

    Good luck with WP7 though ... you'll need it!
  11. Centient macrumors 6502

    Oct 20, 2009
    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.
  12. OllyW Moderator


    Staff Member

    Oct 11, 2005
    The Black Country, England
    No, it will be the same $6 for every future iPhone.

  13. HiRez macrumors 603


    Jan 6, 2004
    Western US
    I think the Nokia patents are more hardware related (GSM), so I'm thinking it'll be the device manufacturers like HTC and Samsung who have to pay and not Google.
  14. Doctor Q Administrator

    Doctor Q

    Staff Member

    Sep 19, 2002
    Los Angeles
    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?
  15. juicedropsdeuce macrumors 6502

    Jun 23, 2010

    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:
  16. *LTD* macrumors G4


    Feb 5, 2009
    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.
  17. lilo777 macrumors 603

    Nov 25, 2009
    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.
  18. G4DP macrumors 65816

    Mar 28, 2007
    So we can expect $20 increases per phone from now on then.
  19. djrobsd, Jun 14, 2011
    Last edited: Jun 14, 2011

    djrobsd macrumors 6502a

    May 2, 2008
    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... ;)
  20. ThisIsNotMe macrumors 68000

    Aug 11, 2008
    If the patent is required to operate a GSM phone, not really sure how they could have done anything else except pay Nokia eventually.
  21. Sjhonny macrumors 6502

    Feb 25, 2011
    The land of the cucumbers
    And NOKIA changed it's business from phoneindustry giant to patent trolling >.<
  22. vincenz macrumors 601


    Oct 20, 2008
  23. NebulaClash macrumors 68000


    Feb 4, 2010
    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.
  24. samcraig macrumors P6

    Jun 22, 2009

    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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