X
Business

Nokia sees Advanced Technology revenues rising to €600m a year after Microsoft deal

Nokia could soon license its technologies, not just patents, to rivals once Microsoft takes the devices business off its hands.
Written by Liam Tung, Contributing Writer

Revenues from Nokia's new patent and R&D business, Advanced Technologies, are expected to rise to €600m a year and could rise increase even higher now the company doesn't need to withhold technologies for its own device business.

With Nokia's soon-to-be-sold hardware business effectively excluded from its financial results, all eyes were on its IP-focused Advanced Technologies (AT) unit on a call with analysts on Thursday.

Nokia said on Thursday that following the sale of its devices business to Microsoft, it expects AT revenues to rise from around €500m this year to €600m a year thereafter.

The sum is based on part of the deal with Microsoft, in which Nokia has agreed to license certain existing patents to Microsoft for 10 years at a cost €1.65bn, of which €100m gives Microsoft the option to continue licensing the patents in perpetuity.

Also yet to be determined is another factor that could dramatically affect AT's bottom line: how much Samsung will end up paying Nokia to license its patents, after the pair's previous patent agreement expired this year. The two companies are headed into arbitration over the exact sum Samsung will have to pay, which is expected to be settled in 2015.

Interim Nokia president and CFO Timo Ihamuotila said Nokia had taken "a prudent approach" to its forecasts for income related to Samsung and Microsoft.

The company's two main opportunities come from its 'standards essential' portfolio of patents and 'implementation' portfolio. In the case of the former set, Nokia must license them out to companies at negotiated "fair and reasonable" rates, but it can withhold the latter, for example, in order to differentiate phone features such as the camera. Since Nokia shortly won't have a devices business, it sees a chance to license those patents to other vendors.

"Many of these implementation patents we have earlier utilised in Nokia's own devices, for example, the camera, where you could say this is such a competitive advantage we don't want to use it all. In that sense if someone infringes, you say no licensing at any cost. That is the way maybe someone like Apple would look at it, not knowing of course what they do," Ihamuotila said.

"In our case, regarding implementation patents, we can look at licensing the IP, or longer term, if we create technology that is interesting to other companies — and gave them the ability to differentiate or a time to market advantage , or cost advantage — then we would also license the technology, and not necessarily just the intellectual property, which would then of course be a different business model and maybe less ie not forcing companies to pay."

Asked whether Nokia expected AT costs to rise with investments in new IP to keep that business rolling, Ihamuotila said the company would not rule out further investments.

Ihamuotila that of the 900 patents Nokia filed last yeat, two-thirds came from AT.

More on Nokia

Editorial standards