Nokia to make cash from iPhone

June 14, 2011

Nokia to make cash from iPhoneNokia has prevailed in its patent battle with Apple through an out of court settlement. The agreement may give Nokia added ammunition to pursue similar complaints against Google over Android.

All that’s officially being revealed about the settlement is that Apple will make a one-time payment to Nokia as well as formally licensing the disputed technologies and paying a royalty on each handset sale.

Unofficially the rumor-mill has the one-off payment being as much as a touch over a billion dollars, with the royalty payment being in the region of $11.50 per handset. Those figures certainly sound credible: the royalty rate, as a proportion of the price Apple receives for each handset, is in line with similar agreements in the past.

If that’s the case, the one-off payment would effectively be a case of Apple paying the “back royalties” on previous iPhone sales but no additional compensation or legal fees. That would seem a sensible compromise if the two sides believed Nokia would likely win if the case went to trial, but that there was still an element of doubt.

It should be noted that there’s a heavy degree of guesstimate in the rumored amounts: some sources have gone as low was $700 million and $6 per handset.

Announcing the outcome, Nokia chief Stephen Elop said “This settlement demonstrates Nokia’s industry leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market.” That’s already been interpreted as meaning it’s full steam ahead against Google.

Pure and innocent readers may be wondering how Google’s breaches (or lack of them) compare with those of Apple. In reality that may be far less important than the fact that Google holds far fewer smartphone-related patents of its own and is thus far less able to come up with counter-claims of violations by Nokia to use as a negotiating point.

At least one analyst has noted that if Nokia were also to win a settlement over Android handsets, the overall situation wouldn’t be all that bad for Apple: although it would still be feeling the pain, its higher margins mean it would be comparatively better off than Android manufacturers.

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