In June Nokia and Apple –2 tech giants – finally ended the continuous patent dispute started in 2009 by signing a patent license agreement. Most details of the treaty weren’t made public. Is it the real end of the clash or just an “armistice”? Not only the users of Nokia and Apple’s devices want to know the answer to this question. The investors are worried as well.
According to Igor Zuev, an analyst for Rietumu (a Latvian bank and one of the biggest financial institution in the Baltic region), over the last few years Apple’s products has been increasingly popular around the world but Nokia outpaces the U.S. corporation in terms of proceeds.
Patent wars. Episode 1: Nokia vs Apple.
According to the experts of Masterforex-V Academy, the history of the patent clash between Apple and Nokia is the following:
· On October 23rd 2009 Nokia filed a case against Apple in the US Federal court in Delaware. That was a patent infringement claim.
· On December 2008 Apple filed a counter-case.
· In May 2010 Nokia sues Apple once again. This time in Wisconsin, USA.
· Apple sues back. This time the action takes place in the UK.
The culmination of the patent clash was reached when Nokia and Apple appealed to the U.S. International Trade Commission (ITC). This is a powerful authority. It can ban any product from being sold in the USA.
Episode 2: Why can’t Apple and Nokia compromise?
The patent clash already turned into a global “patent war” when Samsung became involved. Now the trial proceedings take place all over the world – in the USA, Korea, Japan and Germany. Moreover, like in any major war, numerous satellites came in. A lot of small-scale firms decided to benefit from the situation and filed numerous patient claims.
What are the reasons for the patent war?
The reasons lie on the surface, Masterforex-V Academy experts say. It is all about dominating the market segment of mobile devices (handsets and tablets):
· For a long time Nokia used to be the leader in the market of mobile devices. But in 2007 Apple released iPhone – a revolutionary device. Within the first 12 month Apple sold 100M iPhones all over the world!
· In Q3 2010 Apple outpaced Nokia in terms of sales of mobile devices by earning $1.6B against $1.1B made by Nokia.
· iPhones became extremely popular mostly due to providing full-fledged access to the internet. The cell phone turned into a smartphone (mini-computer with a CPU, an operating system and consequently more advanced computing ability), thus involving in the clash such tech giants as Microsoft, Google and others.
· Smartphones are getting extremely popular with consumers around the world. They created a separate market segment. Now it occupies 19% of the entire market of mobile devices.
· Apple’s rivals became worried about the success iPhones and iPads gained around the world and had to do something about it. They started either copying Apple’s devices or developing their own innovatios.
Smartphones and tablets turned out to be so popular with consumers that even tech giant had to struggle to survive in this market segment, the experts of Masterforex-V Academy say.
Igor Zuev notes that Nokia’s P/E (Price-to-Earnings) value has been declining since 2009 while Apple’s P/E has been growing ever since. However, iPhones and iPads are too expensive for the consumers from the developing economies while Nokia’s products are relatively cheaper. So Nokia become oriented towards Asian and South American markets, yielding to apple in the US and European markets.
What is happening with Nokia and Apple’s stocks?
The agreement signed in mid June 2011 finally ended the clash between the 2 tech giants. Apple is going to pay a one-time compensation and will become Nokia’s licensee (which means annual payments). According to Masterforex-V Academy, Nokia is going to get 1-2% of the income gained from the sales of iPhones and iPads, which is equal to hundreds of millions of dollars.
Now it is difficult to say who is the winner: Nokia will get compensation and annual payments while Apple has become the leader in the segment of smartphones and tablets.
According to the Department of Market Sentiment Analysis, Masterforex-V Academy, the charts of Apple and Nokia’s stocks show the following picture:
Nokia’s stock has already lost over 45% of its value over the last 6 months and is currently updating its record – never before Nokia’s share was cheaper than $6. Yet there are no signs of reversal.
Apple’s stock has been gaining value over the last 2.5 years. Over the last 6 months the growth has been restrained by the patent clash. The price is currently moving in a range. The situation will become clearer as soon as the price comes out of the range.
Market Leader and Masterforex-V Academy would be very grateful to you for participating in a survey. Please, visit the Academy’s forum and answer the question given below:
How will the agreement change the investment attractiveness of Nokia and Apple?
· Their investment attractiveness will grow
· The agreement will only aggravate as Apple and Nokia are rivals
· Your own opinion
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