Nokia has seen its sales figures drop by a considerable margin over the last couple of years after failing to break through the smartphone market.
While the company still earns a considerable amount of money from intellectual property rights. Financial analysts have declared that the company has a gloomy future.
Is Nokia on the verge of collapse?
The company was recently dethroned as the biggest mobile phone maker in the world. Before the market could come to terms with the news that Nokia was losing millions of dollars in sales. The company announced that it will be laying off approximately 10,000 workers globally and closing down two of its factories.
Therefore, the million dollar question is: Is the company on the verge of a collapse or simply restructuring? The determinant factor in this equation hinges on Nokia’s rich source of intellectual property.
Nokia plans to turn its implosion into a ‘transition’
Nokia Business transitions
Transition in the corporate world is something that is often witnessed as companies seek to reposition themselves in the market. It is a well-known fact that Nokia has for some time been strategic to change to Windows.
It started delivering on this guarantee a few months ago. In supporting this move, the company’s chief financial officer (CFO) recently announced to the press that :
“Nokia is in the process of raising its capital through aggressively marketing its intellectual property rights.”
Nokia intellectual property rights:
Since the company is already generating close to $600 million annually from its intellectual property rights through royalties paid to it by Apple and Microsoft, the company expects to raise enough money to see it transits to a new venture. There are talks that Nokia is planning to dispose part of its intellectual property rights portfolio.
Generally, intellectual property rights are crucial in three different ways to an organization’s growth:
When in transition, revenues collected from intellectual property rights can assist in stabilizing a company’s operations when revenue collection from its sales dips momentarily.
How Nokia raised its capital base:
Nokia successfully raised its capital base by successfully suing plethora of companies which included Apple, HTC, ViewSonic as well as Research in Motion. The lawsuits pertained to the infringement of 45 of its patent rights.
The move by Nokia is being seen as a similar move that was made this year by Kodak in a bid to restructure the company in order to return to profitability. Having seen Kodak generate close to $1 billion from licensing revenue, the company saw a means through which it can raise enough cash to assist it with transition.
Reasons for building patent portfolio
The following are some of the key reasons why companies build intellectual property rights portfolio:
- To eradicate violating product. Companies use intellectual property rights to prevent competitors from selling merchandize which make use of their innovations.
- Support a merchandize ecosystem.
- Collect earnings from the merchandize themselves.
- Boost existing valuation.
At this particular point in Nokia’s transition, profits collected are evidently the company’s chief patent plan. Nokia collected more than $600 million in profits in the past year.
Now the company(Nokia) is seeking to consolidate its position in the market through intellectual property business.