Nokia, the world’s leading mobile phone maker, said yesterday that its competitor Apple had agreed to pay royalties for use of Nokia technology in its devices, ending all of their 46 ongoing patent disputes.
“The financial structure of the agreement consists of a one-time payment payable by Apple and on-going royalties to be paid by Apple to Nokia for the term of the agreement,” Nokia said in a statement, adding that the details of the contract were confidential.
The deal constitutes a massive victory for Nokia and ends years of tit-for-tat suits filed by the two companies, with both agreeing to withdraw all complaints they had filed with the US International Trade Commission.
“We are very pleased to have Apple join the growing number of Nokia licensees ... This settlement demonstrates Nokia’s industry leading patent portfolio,” Nokia chief executive Stephen Elop said in the statement.
The Finnish company, which has been struggling to maintain its position as global market leader, also said the deal should have “a positive financial impact” on its second-quarter performance.
Just two weeks ago, Nokia warned that its sales for the quarter would be far worse than previously expected and that it could no longer give a full-year forecast, sending its share price to its lowest level since early 1998.
Nomura analysts said on Monday that Samsung Electronics Co Ltd would become the world’s largest smartphone maker this quarter, overtaking struggling Nokia, which has led the market since 1996.
In the next quarter Nomura sees Apple Inc also overtaking Nokia, pushing the Finnish company to No. 3 in the rankings.
“Nokia looks set to relinquish its smartphone crown to Samsung and Apple,” Nomura analysts said in a research note. “Further emphasizing the shift in power to Asia is our forecast for HTC (宏達電) to almost match Nokia during 2012.”
Research firms Gartner and Canalys both said they saw Nokia — which created the smartphone market with its 1996 launch of the Communicator model — losing smartphone volume leadership later this year.
“If Nokia’s new phones are not well received in the third quarter and with the Galaxy S2 ramping up, Samsung might overtake them and become the smartphone leader in Q3,” Gartner analyst Carolina Milanesi said.
On Monday, Kantar Worldpanel ComTech’s survey showed Nokia’s share of the British smartphone market — seen as a key indicator for trends in Europe — had dropped to 10.6 percent in 12 weeks to mid-May from 31 percent in the same period a year earlier.
Nokia has lost initiative in the smartphone market to Apple’s iPhone and Google Inc’s Android devices and at the lower end to more nimble Asian rivals.
“There is certainly a very close three-way battle going on for the top spot in global smartphone volumes between Nokia, Apple and Samsung during the second quarter,” said Neil Mawston, an analyst at Strategy Analytics.
“With Symbian demand crashing, there is growing opportunity for Samsung or Apple to grab the lead,” said Mawston, but added he still expects Nokia to stay ahead in the ongoing quarter.
Overall, Nokia still makes more cellphones than Samsung because of its strong position in basic cellphones and its wider distribution network in emerging countries.
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