Patent suit Nokia vs Apple

Nokia and Apple settled their law suits over patent infringement out of court.
http://www.cellular-news.com/story/49560.php
http://www.zdnet.com/blog/btl/nokia-likely-netted-600-million-plus-in-apple-patent-settlement/50590

It is said the settlement included a one-time payment between $550 million to $600 million. Apple and Nokia agree on some cross-licensing terms, with a patent license fee up to $11.5 per iPhone sold paid to Nokia. It looks like a victory to Nokia from the result. It is also in a way good for Apple to conclude this fight with Nokia. Based on the latest financial reports from both companies, as of Q2, 2011, Apple has $29.2 billion in cash or cash equivalents, while Nokia has about $16.5 billion. The amount of $600 million is approximately 2 percent of what Apple can pull out of its pocket. With the quarterly iPhone shipment reaches 18 million units, the royalty payment to Nokia is close to $210 million. With Q2 2011 EBITDA income at $7.9 billion, this is affordable to Apple. It is though a boost to Nokia's quarterly EBITDA income of $778 million.

At this point, Nokia has lost one quarter of its global cell phone market share (from 36% down to 27%) and over 50% of its smart phone market share (from around 55-60% to between 20-25%). Nokia lost not just market share, revenue, but also the waning cost advantage associated with scale. Did its patent portfolio protect the company and its shareholders from those aggressive competitors? This patent portfolio did not even help Nokia executives to keep their jobs.

There are two other threads of events worth watching for. One is the patent fight between Chines vendors Huawei and ZTE. Will this domestic dispute result in any legal precedent or will it settle out of court? http://www.cellular-news.com/story/49538.php

The other one is the patent auction by Nortel and Google's intention in Nortel's patents.
http://www.nytimes.com/2011/04/05/technology/05google.html
http://www.reuters.com/article/2011/06/14/us-nortel-idUSTRE75C5WT20110614

A complacent company sued an innovative company and get paid. Do patent laws really encourage innovations?

HP webOS for OEM to license

HP is entertaining the idea of licensing its webOS to other vendors. Or is this just an indication that HP has not sorted out its strategy for webOS?

http://www.reuters.com/article/2011/06/01/hp-ceo-idUSN0116927120110601

It can be a good news for the industry. One more contender means more choices. But this is just on the surface. Windows Mobile has shown that OS licensing is not a lucrative business in the mobile phone industry. If webOS can collect US$10 a piece, a volume at 3.5 million units a quarter, which is roughly Windows Mobile's 2011-Q1 shipment, makes US$140 million a year. It does not seem to be a reasonable payback for the US$1.2 billion paid for acquiring Palm. It may not even be enough for the operation cost for the business unit. Google Android makes money from advertisement revenue, not licensing fees. What is the leverage that HP can get by licensing webOS out? In the meantime, HP has to make it cost-effective for device vendors to invest in webOS. How many vendors have the extra budget and human resource to take on another OS, chipset, and board support package integration? HP did not talk or hint on intellectual property indemnification. With Microsoft onto everyone who is licensing Andorid, that is also an issue HP has to address when going to partners. http://www.zdnet.com/blog/hardware/microsofts-next-cash-cow-android/12998

The talk from HP's CEO seems to be a spillover of internal disagreement on future directions. It has been a year since HP acquired Palm. There can be some pressure built up over what webOS can do for HP. But it is clear to me, licensing webOS out will not help HP, only to create distractions.