It’s a marriage between two giants. The dowry is the ammo that could result in a mammoth smartphone patent war pretty soon. Yes, we are talking about the hot tech news for today – the Nokia-Microsoft $7.2 billion deal.
With absolute access to one of the largest telecom patent portfolios in the world, Microsoft may seem all geared up for a new round of patent battles with a much stronger smartphone force. Well, on the up front, it’s an open secret that Nokia and Microsoft have been hand in glove, charting aggressive litigation strategies against rivals in the smartphone industry. On the face of it, this deal can help Microsoft strengthen its presence in the Indian mobile telephony market (where Nokia still has a stronghold and stands a second leader with 13.2% market share, a close cut to Samsung which leads with a 13.8% market share).
A look into the patent monetization and licensing strategies of both companies points to the fact that Microsoft and Nokia have been pretty much co-ordinated and close on the legal front, what with both companies sharing business ties with patent holding firm, Intellectual Ventures. This does raise questions on whether this patent licensing deal with Nokia will increase Microsoft’s chances to rain more legal fire on rivals? Microsoft has only licensed out the patents, not purchased it. This points the needle to the possibility that Microsoft could inflate the portfolio value during further deals. Licensing, and not purchasing, also seems to be a sensible move by Microsoft, considering a patent life as 20 years, and with many of Nokia’s utility patents most likely nearing the end of their patent lifespan.
Taking a sneak-peek into where else does Microsoft stand to gain with this deal, we find that the Washington-based company is all set to harness a stronghold in the burgeoning Indian mobile telephony market, Nokia’s second largest global mobile market after China – the two countries that have given the biggest fillip to 2G, 3G, and 4G technologies. Microsoft also gains access to Nokia’s existing license with Qualcomm, the third largest 2G and 3G technology patent portfolio holder in the world. The cherry on the icing comes through Nokia’s royalty agreements with IBM, Motorola Mobility and Motorola Solutions. To add to this, Microsoft’s earlier dealing with Samsung ensures that the South Koran multinational provides absolute coverage for the additional Nokia devices, and its agreements with Apple, LG, Nortel, Kodak and the like offer absolute benefits – all this at no additional cost.
On the whole, the picture paints a cost-effective patent arrangement for Microsoft in the smartphone industry.
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