Nokia And Apple – Expect A Counter Suit

Nokia’s patent suit against Apple, however justified, may not do the phone giant any good in the long run.

For one thing, the timing of the suit is a stunning PR blunder. For another, the Finnish phone giant is likely to get counter-sued.

Yesterday, Nokia claimed that Apple is not paying fairly for mobile phone technologies it uses in its iPhones. The first reaction from most people will be to accuse Nokia of jealousy. iPhones are cool and Nokia’s smartphones, no matter how cool they are, are much harder to love.

Add to this the fact that Nokia sued one day after announcing its first ever quarterly loss, with a drastic fall in revenue, and two days after Apple announced soaring profits boosted by sales of its iPhone.

Apple has been selling iPhones for two years, you might ask. Why choose this particular moment to sue? Are things that desparate? Is Nokia so cut off from the world that it has only just noticed the iPhone?

Of course not. The law suit is certainly just the latest stage in ongoing negotiations, and the companies wil have been in touch since before the iPhone saw the light of day.

Nokia’s patents are well known in the industry, and anyone implementing phones to meet communications standards like GSM and UMTS will come across them – as the technology is included in those standards.

Any technology referenced in a standard must be available to competitors under “reasonable and non-discriminatory” terms. Nokia and Apple are simply arguing over what those terms should be – the suit means they have failed to reach agreement. It’s happened before – most notably with Qualcomm.

And it would be a stupid over-simplification to view the results as evidence that Apple’s iPhone has made a deadly inroad into Nokia’s business.

Nokia is a more diverse company than that, and the loss is largely due to problems with its telecoms network side, which sells base station equipment to operators.

And the iPhone is a narrow product, just hitting the smartphone sector, not the much wider range of feature phones and basic phones that Nokia sells round the world. The growth and excitement is in the smartphone sector, but the volume is still in the rest of the phone market.

But, while the legal case is not a direct result of this week’s financial figures, it most certainly is connected to what is happening in the markets. iPhones are stormingly successful, and Nokia does not want to cede control of smartphones to anyone – least of all an irritating Californian upstart.

Nokia has dominated the smartphone sector since it first appeared, with its close links to the Symbian operating system, but Symbian’s share is declining as other contenders appear, including Google Android, along with Palm Pre and Windows Mobile as well as the iPhone.

Nokia’s response has been to try and get wider support for Symbian by swallowing it and then turning it loose as open source.

It has also done its best to try and repeat the iPhone’s success. The N97 is Nokia’s best effort so far as an iPhone killer, and the company is clearly sailing close to things that Apple is known for, such as the multi-touch user interface and musicand content delivery service – with its Ovi app store.

Apple is no slouch when it comes to lawsuits, and a counter-suit would not be a surprise. Indeed, it is quite possible that Nokia’s suit against Apple is a pre-emptive move to start negotiations on Apple technology.