Nokia vs. Apple: $12 per iPhone
The iPhone's had a "free ride" on its patents since 2007, claims a Nokia lawsuit
Who can blame Nokia (NOK) if its nose is out of joint. The Finnish telecommunications giant is used to dominating the global cellphone market, and it still commands a 36.8% share, according to Gartner.
But that's down from 39.5% a year ago. Worse still, Nokia has been getting its clock cleaned by Apple (AAPL) and Research in Motion (RIMM) in smartphones, the fastest growing part of the business. Last week it reported a loss of $886 million as its smartphone share fell from 41% to 35% in the space of three months
So on Thursday it struck back, filing suit against Apple in a Delaware federal court claiming infringement on patents it holds on the integration of GSM, UMTS and wireless LAN — technologies at the heart of Apple's iPhone.
What's at stake, according to Piper Jaffray's Gene Munster, is 1% to 2% of the cost of an iPhone, or in the worst case, about $12 per unit.
Nokia vice president Ilkka Rahnasto, in a prepared statement, put it more grandly:
"The basic principle in the mobile industry is that those companies who contribute in technology development to establish standards create intellectual property, which others then need to compensate for. Apple is also expected to follow this principle. By refusing to agree appropriate terms for Nokia's intellectual property, Apple is attempting to get a free ride on the back of Nokia's innovation."
The operative phrase in that statement is "appropriate terms." According to Munster, Nokia has been in talks with Apple over royalty payments for more than a year. Forty other manufacturers have ponied up, but someone in Cupertino — Steve Jobs? Tim Cook? — must have told Nokia to go jump in a fjord.
Nokia is not claiming ownership of GSM, UMTS and WLAN per se. The GSM protocol, for example, is an internationally adopted standard based on the work of a Norwegian engineer, Torleiv Maseng.
Rather, Nokia is invoking 10 patents on technologies that enable devices to integrate those standards. "The patents," according to Nokia, "cover wireless data, speech coding, security and encryption and are infringed by all Apple iPhone models shipped since the iPhone was introduced in 2007."
Munster believes Nokia is looking for a "commercial settlement" and won't take the extreme step of seeking an injunction that would bring iPhone sales to a halt.
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Dear commenters. Before you trip over your utter cleverness and b/w rhetoric… consider this.
After spending a decade in patent lawsuits with Qualcomm… and ending up paying north of a billion dollars in royalties…
Don't you agree that they just MIGHT know what they're getting into??? On U.S. soil, too. This is no Hasty Pudding.
My take on the legal fight is this:
Nokia want to be very, very careful.
Nokia management and shareholders are largely European based.
For the past 5 years, the EU judiciary has seen fit to crucify Microsoft and bleed it for massive, massive money in bogus anti trust suits.
Nobody cares, but don't be fooled. Nobody is in any doubt. (I am talking about the lawyers who follow the legal reasoning: i.e. the judges who will hear Nokia's case in the USA.)
If Nokia think they can walk into the USA and throw legal arguments around like they can in the EU, they have drunk WAY too much of their own kool aid.
I suspect the US judiciary will hammer Nokia, and hammer them hard.
I would, if it were me on the bench. The European political elite have used their pet judiciary to punish the great satan America and to judicially steal microsofts capital.
I say the American judges should run these bums out of town. Nokia are weak and vulnerable and stupid to take this fight to Apple given the recent international history of computer patent law. They are throwing punches in a market they have no right to speak to.
Hammer them, sirs. Make them squeal in Helsinki, and let the Europeans know the price of mercenary law.
Oh PED, you owe me.
You know, I know. they might not know, but there is a lot they don't know.
You're second or next born will be named cynik, or we are not square.
Dear Americans, Accept that Apple is US company… that doesn't make Apple a hero here …. will Microsoft be quiet if you install pirated copies of windows and sell them for a profit. its something like stealing your property.. wake up guys. Nokia has developed technology by spending Billions of Euros… Its not fair in Apple's part to use it without paying Nokia… Consider will you be quiet if someone steals your Wallet ??? no rite ?? Be fair guys !!!
Here's the reason why…
From AllThingsD
http://digitaldaily.allthingsd.com/20091023/did-nokia-sue-apple-before-apple-could-sue-nokia/?reflink=ATD_yahoo_ticker
Nokia is about to release an iPhone copy.
Asked once about the striking similarities between a touchscreen device it was designing and Apple’s iconic handset, Anssi Vanjoki Nokia’s head of multimedia devices replied, “If there is something good in the world then we copy with pride.”
$199 for 16GB iPhone, many free apps, and i made profit selling my old iPhone with lots of bump and scratchs.
VS. Nokia N93 New $599, does not have touch screen. slow internet, sucks apps, useless GPS and I could not even sell it for $200 NEW!…
Of course iPhone
How long has Nokia been in the cell phone business?
Apple going only in it's third year with the iPhone making $4.5 billion vs 9.8 billion for Nokia though Apple made 2 billion profit vs only 1 billion for Nokia.
offtopic: Hey Einsteins, Finland doesn't have any fjords…Norway does. Otherwise a pretty good attempt at a wisecrack.
ex ped: "In the Finnish language, a word vuono is used although there is only one fjord in Finland." Source: http://en.wikipedia.org/wiki/Fjord
Nokia, good news. SCO's former CEO is freshly new on the market. If you're strategy is to grow sales via law suits, this CEO is trained and ready to apply the learning.
Vultures. They see a good thing and want to profit from their lack of innovation. I will never buy a Nokia product. I have had several over time but this bugs me.
Nokia = Bad
Apple = Good
I will now be replacing my kids Nokia phones with iPhones…. They will be thrilled.
@Staska, the iPhone grew about 40% this quarter. Shipments were up 7%, while actual sales were up 40%. Last year, Apple had to restock the channel inventory, so 2M of the 6.9M were inventory at retailers, only 4.9M were sold to end users. This year, Apple added about 500k to inventory, so 6.9M were sold to end users of the 7.4M shipped. That's about a 40% increase in actual sales.
Hmmm…aren't these all related to radio technology, which Apple buys from their suppliers? Why sue Apple, shouldn't they be suing the OEMs that sold the GSM, UMTS or WLAN radio chips?
Nokia should get over themselves. I've produced a lot of 'intellectual property' I got paid peanuts for and get nothing for now; to say nothing of the robbery going on against those offshore workers being paid peanuts.
Not everybody can get royalties forever like the movie studios.
Ha. Thats awesome.Nokia are jealous because they cant
catch up and control the market . No wonder its because iphone allows
everyone to profit from – including you and me – http://www.serious-iphoneprofits.cjb.net
This should be a wakeup call to Nokia that they need to get their ideas to market faster. I have seen some of their future concept phone ideas. Very cool but if people can't buy them Nokia will continue to lose market share.
It's always funny to read those daily headline challenged comments on Nokia's dire straights.
Nokia lost $800M+ this quarter? Yep. Did you bother check where? It was Nokia Siemens Networks goodwill writedown. And that is part of mobile infrastructure biz, nothing to do with phones. Nothing to do with cash, or phone biz.
And they earned something like $700 mil profit in phones.
Sore losers? Heh. If they see that everyone else is paying up, and Apple owes them few hundred mil… Why not. If it drags on for a few years, so what, a few more hundred mil will be added to the settlement by Apple. But it has nothing to do with stopping or even impacting iPhone sales.
Huge losses in smartphone marketshare this quarter? Well, if I made any long term projections from 1q results… Nokia gained 2% last q, lost 6% this q, and predicted that that in July. And gave us the reason – "component shortages, and we won't be able to make enough phones". And they. most likely, and will, most likely gain most of it back in the next 2 quarters max.
And this whole attitude about the smartphones, as the next big thing in the battle towards domination of mobile industry, is way overblown.
The real game/war in mobile world domination, for the next 2-3 years, at least, will be between Nokia and Samsung.
Sorry, but Apple, RIM and Google are just a footnotes in this game. And will remain so for years. The real runners up are LG and HTC, for now.
Just look at the absolute figures, and, when the time is right, at the rate of growth. Which we can not see yet for many of them. Growing 1000% from 1 mil to 10 mil, in this industry, doesn't meant a thing.
And, if i am not mistaken, iPhone grew something like 7% YoY this Q?
ex ped: You're right about the Siemens write-down. But not sure your ideas about where the real growth is will stand the test of time. The margins in feature phones is getting thinner, which is one of the reasons there's so much action in smartphones.
Strange that nobody sees what this is really about.
Apple has neither participated nor contributed to the standardization, development porcess of GSM and WCDMA.
If they would, they would be a member and would have signed lots of papers, FRAND, etc "at the door".
In these cases there are normally no need for going to courts (except for Qualcom).
However, Apple does also not produce, design nor manyfacter any GSM-WCDMA technology, they just buy, assemble and sell the chips.
Little facts like this should vhange the fantasies that people produce.
HH
Some people are so surprised or upset by the IP lawsuit. You do what you can to protect your company. Other manufactures have paid the royalty, which may already include RIM. Unless Apple can prove otherwise, it is strictly business. Any company would do the same.
It would not surprise me to find that the companies that are paying Nokia license fees are using Symbian OS and get the other technology licenses thrown in for the same fee. Because APPL uses Mac OS they don't need Symbian so they may be fighting about what exactly the other technology licenses are worth. The counterpoint on that would be that RIM and PALM and Android phones would be in the same situation. In any case, trying to win one of these nerd cases is almost impossible.
Too many freakin ex ped-ophiles. Everything stated here is someone's two cents and not worth even that.
Ex ped: Certainly more than one fjord is driven in Finland.
@TimB: I think Nokia's US market share is already less than 20%. Maybe you meant worldwide market share?
if so, Rim should be in the same list of vendors GSM/UMTS/WLAN integration infringement put forth by Nokia.
RIM is probably doing the same thing, but might be paying Nokia. Apple is not, probably because Nokia can't negotiate like Jobs. Ever notice that Apple still does not make a multi-button mouse? Apple went so far as to make the Mighty Mouse and the new Magic Mouse (which handles gestures) which both function as mutli-button mice, but are still pulled it off with one single button, pressure sensors and now touch sensors. THAT is Jobs. Nokia is dealing with a maniacal genius. Good luck with that.
I wonder if Apple would like to lose this suit. (I admit this is a stretch) It might be advantageous to create a precedent. Apple can then smash Nokia, as well as Palm on the multi-touch patents, as well as the UI and cripple Nokia's and Palm's new devices. Instead of fighting really hard to defend the multi-touch patents, a precedent can easily be created, making it much easier to defend the numerous Apple Patents that are infringed upon.
Apple should patent "coolness" as well. Why not? Apple is the only one pulling that off.
if so, Rim should be in the same list of vendors GSM/UMTS/WLAN integration infringement put forth by Nokia.
ex ped: Unless RIM already agreed to pay Nokia its royalties.
"about $12 per unit" That is WAY too much. Why isn't Nokia suing RIMM also?
Are the patents valid? Is the 4G technology outside of Nokia's patents?
Dear Nokia,
Who are you to lecture anyone about IP infrigement?
Love, Qualcommm
P.S. Before this is settled, your US market share will be less than 20%
Nokia is just looking to trade access to Apple patents. They probably have a smartphone in the pipeline and don't want to be in the same situation as the Palm Pre, when it was released. Who know, maybe Nokia is trying to trade their patents for access to iTunes. BTW, EVERY company plays this game of IP lawsuits.
Nokia's just a big, frustrated Pussy who van stand seeing his ass handed to him Im front of the world buy us "weaking US" Americans,,,kicking ass and gaining market share not only in the smartphone sector with our iPhone vs their antiquated phone that just can't keep up…but also with our Mac system gaining market share in the PC market as well. Time for him to "Man-up", smell the coffee, hear the music & see what the public wants…the iPhone…and get his quack, I mean crack staff of techies working on a netter smartphone for Nomia to market….rather than throwing stones at David with Goliath's slingshot!
Nokia is such a sore loser. They just can't accept being beaten by a superior competitor. What they should have done is to acquire Palm to make up for loss time and catch up from there, instead of hanging on to their out-dated Symbian OS.
It seems to me that Nokia is just being a bunch of sore losers.
Welcome to the school of hard NOKs. :\
Making a successful claim in these kinds of cases is very difficult. Palm ripped off the iPhone user interface which was truly innovative and fully patented because the ex-APPL guys at Palm understood that most of these patents cannot be enforced in law. For one thing the judges have no idea about what is being argued.
So for APPL to say "I'll see you in court" makes a lot of sense. In the very worst case they drag through the courts for the next 5 years and in the very improbable case where they lose they will have to pay Nokia a few million bucks.
I have great respect for Nokia. They have been an innovator for years. But they have gotten themselves behind the 8 ball in smart phones and need to do something dramatic to re-establish themselves in the North American market. A law suit will not do it. They need to buy PALM and do it quickly.
Nokia might be losing to Apple, but I feel confident that at least some of Apple's profit margin has to do with Apple's patent infringement. I have a hard time believing Apple did ALL of their own R&D to develop the technology to create the iPhone considering their profit margins are huge. Chances are that Apple's expenses are lower because of this type of shortcut.
The R&D cost of developing their own GSM, UMTS, and wireless LAN integration seems like a likely piece of why Apple's profit margin on the iPhone is so high.
Just because Nokia is losing market share to Apple quickly, does that automatically mean that any lawsuit they file should be dismissed because they're just sore losers?
I'd love to hear more on how Apple integrated GSM, UMTS, and wireless LAN. This sounds like it could go either way, but my gut is that Apple did infringe on the Nokia patent.
This is the U.S. Apple is innocent until proven guilty.