The Lumia handsets are officially a hit. They may not have
sold as many units as the iPhone 5, the Galaxy S III or the
Galaxy Note II, but they are still some of the most popular
smartphones released in 2012.
This has sparked a much-needed win for Nokia (NYSE:
), which has been struggling to survive the highly competitive
smartphone market. Unlike Apple (NASDAQ:
) and Samsung, however, Nokia has not been forced to go at it
alone. The company has received quarterly payments from Microsoft
) in the amount of $250 million.
This money is used to offset the royalty payments that Nokia
pays to Microsoft for using the Windows Phone 8 operating system.
Thus far, Microsoft's payments have exceeded the minimum royalty
commitment payments that Nokia has been required to pay. This has
effectively saved Nokia millions of dollars.
Looking ahead, the Lumia maker expects that to change. Nokia
that for the "remainder of the life of the agreement the total
amount of the minimum software royalty commitment payments are
expected to exceed the total amount of the platform support
estimates that Nokia's royalty commitments will exceed $1 billion
annually in the years to come, thus providing Microsoft with
ongoing royalty payments.
For this to occur, Nokia will have to increase the number of
Lumia devices that are sold in 2013. While it is unclear how many
units Nokia would need to sell before it has to send Microsoft a
royalty check, the company sold more than 4.4 million Lumia
handsets in the fourth quarter. In 2012 the company sold more
than 14 million units.
By comparison, Nokia only sold one million units when the
first Lumia device was released in the fall of 2011.
Nokia's impressive sales increase comes at a time when the
smartphone market is growing for both of its chief competitors --
Apple and Samsung. Apple sold 37 million iPhones in the fall of
2011 and a whopping
47.8 million iPhones
in the fall of 2012.
five million Galaxy Notes
in five months last year. The company sped up its sales time to
just two months
when the Galaxy Note II was released, which moved another five
Similarly, Samsung sold
20 million Galaxy S II
handsets in 10 months. The South Korean tech giant sold
30 million Galaxy S III
handsets in roughly half the time.
According to a
translation of a
Samsung sales report
, the company plans to sell as many as 10 million Galaxy S IV
units per month after the handset is released. Samsung has yet to
formally announce the new smartphone, but it is expected to be
unveiled sometime this spring.
Apple and Samsung's ongoing success should have theoretically
hurt Nokia as it has in the past. In 2012, however, Nokia only
grew stronger. It seems that the company believes it will perform
even better in 2013.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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