Apple-Nokia dispute ends in major business deal
24 May 2017
Apple Inc has settled a patent dispute with Finnish telecom equipment maker Nokia, which has resulted in Apple agreeing to buy more of Nokia's network products and services.
The deal means Nokia will get bigger royalties from Apple for using its mobile phone patents, helping offset the impact of waning demand for its mobile network hardware.
According to Reuters, such legal battles are common in the industry but can drag on for years and analysts had not been expecting such a quick resolution to the dispute that started in December.
Under the deal, announced in a joint statement from the companies on Tuesday, Nokia will supply network infrastructure products to Apple, and Apple will resume sales of Nokia's digital health products in retail and online stores and look at further collaboration in health.
Digital health is one of the areas Nokia is targeting as it tries to develop new businesses to offset the industry-wide slump in demand for network equipment. Last year, Nokia bought France's Withings SA, a small firm with products such as activity trackers and baby monitors built on digital platforms.
Nokia chief executive officer Rajeev Suri told the company's annual general meeting on Tuesday that the deal would help expand network sales beyond telecom operators to global internet and technology giants.
"(The deal) involves a business collaboration ... in particular in areas of IP and optical equipment, which is quite key to webscale players when they build their data centres," he said. "It's a good deal, a multi-year licensing deal, and I love it that it has an industrial deal and aspect to it."
Under the patent licence agreement, Nokia will receive a "significant" upfront cash payment and additional revenues from Apple starting from the current quarter. The companies did not give further details but analysts told Reuters the revenue was likely to be far higher than a previous deal.
Nokia shares, which fell in December when the patent dispute was announced, jumped to their highest since February 2016 and were up 6.7 per cent at €5.89 by 1509 GMT on Tuesday.
A previous patent licence contract between the companies expired last year, and both sides took legal action in December. Apple complained of being overcharged and Nokia responded by accusing Apple of violating technology patents.
"(The agreement) moves our relationship with Apple from being adversaries in court to business partners," Nokia's chief legal officer Maria Varsellona said in a statement.
Patent royalties represent only a sliver of Nokia's overall revenue, more than 90 per cent of which comes from telecom network equipment. But licensing payments are highly profitable and the network business is suffering an industry-wide slump.
Nokia's patents cover technology that reduces the need for hardware components in a phone, conserves battery life, increases radio reception, helps in recovering lost phones and enables voice recognition, among other features.
Once the world's dominant cellphone maker, Nokia sold its handset business to Microsoft in 2014 to focus on its network business and large portfolio of mobile device patents.