How The iPhone Benefits Nokia
Nokia has had an interesting decade: it’s used two smartphone platforms that tried to compete with both the Apple iPhone and Google’s Android devices, and lost. Nokia’s first smartphone platform is called Symbian OS, which is now old enough to drive itself to work. Nokia replaced Symbian OS with Microsoft Windows Phone, which ultimately resulted in Microsoft buying Nokia and later abandoning the platform. Windows Phone couldn’t compete with the iPhones and the Androids of the smartphone world. Under the terms of the Microsoft deal, Nokia were forbidden from selling a branded smartphone until the very end of 2016.
Although Nokia’s smartphones were not competitive, over the years the company has amassed many technology patents. The company have a lot of protected know-how behind them, and sometimes knowing how to do something is more valuable than actually doing it. There’s a history between Apple and Nokia and it’s surrounding patents. The companies signed a deal back in 2011 but since then, Nokia has accused Apple of using it’s protected technology without paying. Apple are of course no stranger to patent protection lawsuits.
Nokia is now using the Android platform and is a competitor to the Apple iPhone. Yes, at the time of writing, Nokia has only released low to mid-range devices, which cost under half that of the iPhone, but they’re smartphones. We’ve seen Apple sue competitors for less (grin)! However, we’ve learnt that Apple and Nokia have settled all their patent disputes in a deal that saw Apple send Nokia €1.7 billion, which is approximately £1.5 billion or $2 billion. This would seem to be the gift that keeps on giving as long as people buy iPhones: in 2011, Apple and Nokia signed a royalties agreement, which sees Nokia earn money from every iPhone sold.
Both Apple and Nokia are keeping the terms of these arrangements close to their chest: the €1.7 billion money from Apple was only discovered by looking through Nokia’s second quarter results. For Nokia, this cash represents only part of Apple’s payment. In other words, there’s more to follow… and given that Apple is still selling every iPhone it can make, it seems that as a business, Nokia is hedging its bets.
I don’t see myself buying an Apple iPhone any time soon, but I could see myself buying a Nokia device. The Finnish company stands to benefit from either choice.