Although Apple scoffed at the financial impact of the settlement, licensing fees of Nokia technologies in the iPhone will end up costing Apple billions.
The Cupertino, Calif. company could pay Nokia a lump sum of up to $608 million with about $138 million in licensing fees going to the Finnish firm every three months, according to Deutsche Bank analyst Kai Korschelt. The analyst bases those figures on the assumption Apple’s pays the going royalty rate of 1 percent on all iPhones sold through the first quarter – 110 million handsets with an average price tag of $550. Per quarter, ongoing licensing fees could be $138 million (95 million euros), the Deutsche Bank expert says.
Tuesday, Apple announced it was settling with Nokia, telling investors it was happy to get the long-running lawsuit behind it. Analyst reaction appeared to favor Apple, with UBS’ Maynard Um telling clients the settlement could save the tech giant money otherwise spent for legal fees.
The lawsuit, which began in 2009, provided wins and losses for both sides. In March, the U.S. International Trade Commission partially ruled in Apple’s favor, ruling the iPhone maker did not infringe as many patents as Nokia contended. That partial victory may have enabled Apple to gain better settlement terms. However, the die was cast when ITC staff in April told the Commission it felt Nokia did not infringe Apple’s patents.
Nokia may have won a Pyrrhic victory Tuesday after Apple Monday overtook the cell phone veteran for first place in smartphone sales. Lucky thing Apple’s got deep pockets.