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December 22, 2015

Ericsson Strikes Patent Deal With Apple for Better Mobile Connectivity

Most of what we've heard about Ericsson these days centers on their future 5G offerings, but recent news has shifted our focus. Ericsson has signed a patent deal with Apple, offering the Cupertino giant access to a new technology that should make iPads and iPhones much better when used on the road.

The patent deal ends a year-long battle between the two firms, which was one of the fiercest fights mobile technology has ever seen. Last year, Ericsson took Apple to a U.S. district court with the charge that Apple was using Ericsson technology, even after Apple's license to do so had expired. With this new agreement, that changes. Now the two companies will be able to work together, according to word from Ericsson. It certainly helped the stock price, as Ericsson shares rose as much as eight percent following initial reports.

Ericsson didn't comment on how much it expects the Apple deal to contribute, but a UBS analysis suggested a “catch-up payment” of around 13 to 14 billion crowns, or $428 million. If that holds true for the future of the agreement, it represents a substantial influx of cash flow into Ericsson's coffers.

The technology in question covers not only the current 4G LTE system, but extends back to 3G and even 2G connectivity, and will also provide some help as Ericsson joins in the move to 5G connectivity. With this tool, Apple devices can more readily connect to mobile networks, and that naturally makes the devices more valuable.

It's been one of Apple's biggest selling points over the last few years, and potentially one of the reasons we don't see many BlackBerry devices around anymore: the connection to the mobile workforce. Apple devices have been stepping up the productivity for some time, bringing in video conferencing tools, connections to Microsoft Office, and a host of other points to put out a better value for professionals who want to use the devices to work remotely. If these devices can't readily connect to a mobile network, it reduces the value of same substantially; while there are still plenty of Wi-Fi connectivity options out there, these require a user to be in a specific location to take advantage. It's not just about mobile work, however; mobile networks make iPhones into information powerhouses, available where—and when—needed. The loss of that connection would be a crippling blow to Apple.

Mobile technology depends as much on connectivity as it does the device itself, which makes this deal a deeply important one for Apple. Throw in a big new revenue stream for Ericsson, and that makes this patent deal likely welcome for all sides. 

Edited by Kyle Piscioniere

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