In Nokia’s most recent financial quarter, the company announced a$1.7 billion loss attributed to rapidly declining sales of devices using its Symbian cash cow operating system as the company makes a hard transition to Microsoft’s Windows Phone 7 OS. Nokia had cautioned and analysts had warned before that it will get worse before it gets better, but migrating to Microsoft’s more modern OS will be a good bet for Nokia as it tries to compete against more modern platforms like iOS and Android. One thing that was apparent from Nokia’s losing quarter is that the company makes more money licensing its mobile technology to Apple for use on iOS and the iPhone and iPad than it does selling its own wares to consumers.
The case shouldn’t be surprising. Microsoft, the company that makes the Windows Phone platform that Nokia uses on its Lumia handsets (Lumia 610, 710, 800, 900 models), is speculated to make more money licensing its patent portfolio to Android-makers than it does licensing its own Windows Phone OS to hardware-makers like Nokia, HTC, Samsung, and LG.
The main favorable thing from Nokia’s earnings report is the $600 licensing fee that it obtained from Apple.
And while patent disputes and licensing is one of the trends that has emerged in recent years, most notably with patent battles between Apple and Android licensees Samsung, HTC, and Motorola, there’s another hard reality–it’s expensive to make hardware and compete in the space. Motorola Mobility, which is struggling in making money, was recently acquired by Google for its patent portfolio to the price of $12.5 billion.
With patents becoming increasingly more valuable in the mobile space, this is leading to speculations that Nokia may face the same fate as Motorola Mobility if it doesn’t make a turnaround. AppleInsider is speculating that Nokia may either exit the smartphone business to license its patents and make money that way, or that the company may sell the company to a willing buyer. This isn’t quite a stretch as there were speculations before the Google-Motorola Mobility deal that Microsoft may try to acquire Nokia to boost Windows Phone’s mind share.