Apple's $1.05 Billion Payday May Be Bigger Microsoft, Nokia Win
Nokia may prove an unexpected beneficiary of Apple's big win in court.
A jury Aug. 24 awarded Apple $1.05 billion in damages, after finding that Samsung included several features in its devices that are protected by Apple patents. While happy news for Apple-which in Samsung has found its only real rival for sales of its iPhones and iPads-the news is expected to indirectly benefit Microsoft and its biggest mobile backer, Nokia.
Samsung is currently the world's leading supplier of smartphones. On news of the ruling, which could set back the company to a degree still to be determined, Nokia shares rose 10 percent Aug. 27, Reuters reported.
"I think the Samsung/Apple decision benefits vendors of Microsoft Phone devices, and that puts Nokia at the top of the list," Ezra Gottheil, a senior analyst with Technology Business Research, told eWEEK.
Because of the ruling, major vendors are likely to invest more in Windows Phone devices, which will increase Nokia's competition in the space, said Gottheil.
Still, he added, "Windows phones have been given a major boost, and if Nokia delivers some killer devices, it can leverage its well-established relationships with network providers. Samsung, its biggest competitor, will take a while to recover. I think this nets out as a win for Nokia, and an opportunity to become relevant again."
Nordea analyst Sami Sarkamies suggested the ruling has been just the break Microsoft has been in need of.
"As Android and Apple tear each other apart, Microsoft has been waiting in the wings and is in a very good position to move in and entice users to switch from Android to Microsoft, as we have already seen that user loyalty is low," Sarkamies wrote in a research note, according to Reuters.
The timing of the ruling also comes as Microsoft and Nokia make their next big move. Analysts have anticipated that the pair used the Nokia Lumia 900 to get a foot through the door, and with their next offering-timed for the winter holiday season-will make a strong push into the mobile phone scene.
Nokia has an event planned for Sept. 5 in New York City, where it's widely expected to introduce its latest collaboration with Microsoft.
During the first quarter of this year, Samsung outsold a hurting Nokia and ended its 14-year domination of the mobile market. Samsung now tops the list of overall phone makers as well as smartphone makers. During the second quarter, it sold 90.4 million devices to Nokia's 83.4 million and Apple's 28.9 million, according to Gartner.
Less concerning for Nokia than regaining its title is stopping the defection of its fans to iPhones and Android-supporting brands, which Nokia first sought to address with its February 2011 announcement that it was ending its allegiance to Symbian in favor of Windows Phone. Lately, that decision has begun working in its favor.
While year-over-year Nokia's second-quarter shipments were down-it shipped 97.9 million devices during the second quarter of 2011-quarter-to-quarter it surprised analysts by managing to increase its market share during the second quarter.
And while a Microsoft emboldened by a down-on-its-luck Samsung is a boon to Nokia, the phone maker also intends to help itself through a number of other partnerships.
"Our aim is to become the 'where' company. Just as Google redefined the 'what' with search and Facebook redefined the 'who' with social media, Nokia intends to redefine the where with mapping and location-based services," Nokia CEO Stephen Elop announced during a July 19 earnings call, offering a hint of what we might see Sept. 5.
"A broadening array of devices and experiences could capture our location, orientation, speed and even pulse rate while understanding our social media preferences, our likes, our dislikes and our passions," Elop added. "With our NAVTEQ asset and focused execution, we believe we can be a leader in this next generation of experiences."
Tipping his hand further, Elop added, "As the lead mobile partner for Microsoft, we plan to deliver competitive smartphones with Windows Phone. We intend to broaden the price point range of Lumia devices to price points both higher for better gross margins and lower for volume. Additionally, we are investing in new materials [and] new technologies ... for a great consumer experience."
Neil Mawston, executive director of Strategy Analytics' Global Wireless practice, offered eWEEK a more tempered take on the trial's likely impact on Nokia.
"A little shine has been rubbed off the Android and Samsung halos during the public court case in California, while the new Apple tax could slightly raise the price of some Samsung phones in the future," he said.
"Nokia can quietly seed the thought among operators that Windows Phone may become an Apple-safer alternative to Android in the longer-term," Mawston added. "We expect Nokia and Microsoft to gain a minor, but not major, boost from Apple's win."
EDITOR'S NOTE: This article has been updated to include additional analysis.