David Prosser: Apple deal underlines Nokia's problems

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The Independent Online

Outlook Neither side is saying how much money will change hands, but the fact Apple has agreed to pay Nokia royalties on sales of its products in the future is a rare bit of good news for the Finnish company. The deal settles the bitter patent dispute between the two companies in Nokia's favour and some analysts think it could be worth upwards of £100m a year.

Still, when Stephen Elop, Nokia's new chief executive, caused such hilarity earlier this year with a memo to staff warning that the company was "standing on a burning platform", this was not what he had in mind for a jumping-off strategy. Milking a few licensing fees out of Apple for technologies invented years ago is no substitute for coming up with a product range that might compete with the iPhone and the rest of the smartphone market.

Under Mr Elop – and courtesy of a deal signed with Microsoft, his former employer – Nokia hopes to bring such a range to market by the end of the year. But by then, it will have lost its No 1 position in smartphone sales to Samsung and will probably have been overtaken by Apple too.

What will really irritate Mr Elop about yesterday's deal is that it suggests Nokia had much of the winning technology at its fingertips before the iPhone came along, only for it to lose its way as Apple's marketing and design-led juggernaut steamrollered all before it.

Yesterday's deal will give Nokia just a little more time to prove it can capitalise on a winning formula at the second attempt. But it needs to be tempered against last months' profits warning. That revealed just how quickly the Finnish company is losing ground.

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