With growing income and a healthy margin patent licensing is confirmed as big business for Nokia 29 Apr 14
Nokia’s Technologies division, which runs the company’s IP licensing programme, generated revenues of €131 million in the first quarter of 2014, a rise of 8% on the previous quarter and a year on year rise of 7%. The amount is roughly equivalent to $181 million. Significantly, it does not include any royalty income from the €1.65 billion, 10-year licensing deal that Nokia agreed with Microsoft as part of the sale of its handsets business to the American company because this only closed last week. Throw that into the equation and it seems reasonable to say that, finally, this financial year Nokia will become a $1 billion a year patent licensing business. And that, remember, is before it really gets its teeth into chasing down many potential licensees in the Android eco-system and elsewhere. In FY 2013, Nokia made €525 million ($733 million) in royalties.
The other thing that stands out when you look at the results is the margin that Technologies enjoys. At 65.6% it is substantially higher than those in Nokia’s other two business units: HERE works to a 4.8% margin, while Networks’ is 10.8%. This emphasises just how lucrative a successful corporate licensing programme can be. It also shows that while in overall income terms licensing may not be the biggest money generator for a company such as Nokia, when you come to look at profit it does make a respectable contribution. It’s an observation this blog has also made previously about Microsoft and Ericsson too. For companies that have invested in creating high quality patent portfolios on the back of huge R&D spends this is a great incentive to carry on doing more of the same.
Register for more free content
- Read more IAM blogs and articles
- Receive the editor's weekly review by email