Did everyone who has speculated Nokia might sell its handset business forget its huge stack of patents and the clout that brings?
If so, today’s announcement it has settled litigation with Apple is a wake up call about the power the Finnish vendor still wields in the mobile device sector. Apple agreed to license Nokia’s patents for a one-time fee and continuing royalties in a move that reminds us all the big fruit is a late comer to the mobile phone market, not an early mover.
It’s easy to get lost in the headlines about smartphone sales and the credit Apple is given for showing everyone the way forward in terms of app stores and ‘ecosystems’ (a word I still shudder to use in anything other than reference to the natural world).
So, we’ll rely on embattled Nokia chief Stephen Elop to set the record straight. “This settlement demonstrates Nokia’s industry leading patent portfolio.”
The firm’s official presser sets out the fact it has spent €43 billion ($62.2 billion) on R&D over the past 20 years, and built up a portfolio of 10,000 patents in the process. The statistics lend some credence to its claim to holding “one of the wireless industry’s strongest and broadest IPR portfolios.”
Those of us that have covered this industry for more than a decade can well remember the ‘holy war’ between Nokia and Qualcomm – another firm that has a huge stack of wireless patents, which it proudly displays on the walls of its headquarters. The strength of the pair’s respective claims resulted in a stalemate and a host of cross-licensing agreements.
That Apple has not agreed such a cross-licensing deal speaks volumes to its potentially precarious position in the wireless business.
The final irony is that the Apple license could actually help Nokia dig itself out of a financial hole that has seen its credit rating reduced to one notch above junk in the past week, following a profit warning. The vendor’s statement reveals the deal will have a “positive impact” on its 2Q results.