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The Wall Street Journal writes about mounting legal woes of Qualcomm, which is being sued by almost everyone in the mobile hardware business, especially chip and handset makers. While that might be an issue, it might not be the only issue, and perhaps not the real […]

The Wall Street Journal writes about mounting legal woes of Qualcomm, which is being sued by almost everyone in the mobile hardware business, especially chip and handset makers. While that might be an issue, it might not be the only issue, and perhaps not the real challenge facing the company. Qualcomm has an army of attorneys for precisely this kind of situation and have spent million preparing for a legal smack down.

WSJ, should have perhaps focused on other and perhaps the real challenge ahead of Qualcomm: some of its fast growing markets are planning to build GSM overlays on their CDMA networks. Brazil and India are two examples. South Korea wants its wireless future to be Q-Free and well, Sprint has made its WiMAX decision. I think those are the big issues, not those pesky lawsuits by competitors. That’s business as usual in the chip industry.

Some good news for Qualcomm though:

1. 3G subscriptions, including CDMA2000, are forecast to hit 285 million by the end of 2006, according to ABI Research’s Asia-Pacific director, Jake Saunders. As we all know 3G is a loosely defined term, so that just might be right.
2. Couple of South Asian countries are seeing some hefty CDMA growth and are rolling out new services.

By Om Malik

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  1. Remember that a lateral move from CDMA to GSM sets up a carrier for an eventual upgrade to UMTS 3G. Qualcomm has their grubby paws on every UMTS handset since UMTS is based on CDMA so this doesn’t really leave them out in the cold. WiMAX and the OFDM based long term evolution (LTE) path for UMTS are the scarier options for the big Q…hence the Flarion acquisition.

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  2. qbert, this might be a near term blip, but i am worried about the cdma growth in emerging markets. i don’t think 3G is going to be a factor in countries where price of phone calls is a factor of penny a minute. 3G will remain seriously expensive for those nations, but eventually when the world goes UMTS, it might result in qualcomm resuming their tax.

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  3. Om, the world may never go UMTS or even LTE. As you correctly point out, 3G is no cheaper for vanilla voice than GSM or CDMAONE. By the time poorer countries are ready to pay for mobile data, they should be able to leap-frog CDMA-based solutions. Qualcomm is facing an Apple moment here. They have excellent solutions that come with a price premium, while open-architecture will never be as good, but it just might well be good enough. Is their model of industry domination through IP viable? Meanwhile, in a sense, MediaFlo is their iPod/iTunes.

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  4. Jesse:

    Comparing MediaFlo to iPod/iTunes is a bit of a stretch, the latter did not have an industry standard like DVB-H to compete against as in the case of MediaFlo. Like Om points out, people everywhere are getting tired of Qualcomm’s IP royalties with CDMA to begin with, so it is going to be tricky for them to get yet another proprietary technology (MediaFlo) being adopted.

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  5. Jesse Kopelman Friday, September 8, 2006

    Really Multy, you don’t think MP3 was the industry standard when iTunes and AAC launched? What about generic MP3 players that were around before the iPod? Apple has taken its proprietary standards into the music world and done pretty well. If you can’t see the similarities between Apple and Qualcomm, well . . .

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  6. (Just want to touch migration of few operators issue)
    To me, its not Qualcomm, but Nokia is at biggest risk. Why Did Roman empire faded into history, why Arabian intellectualism died with the end of Dark ages in EU.. so many example.. reason is simple. World needs sustained growth, and growth is like a fall at the top of world. Nokia may be behind this whole Reliance and other companies move.
    We need to understand that Nokia is in Handset buss, and all other stuff is just activators of core bussiness growth. Giving Subsidy in the network/infrastructure, can be compensated in handset growth in GSM and eventual UMTS market (lets not say 3G/4G… these are just acedamic). Nokia is steadily losing handset market (forget about %, that can be taken care of later on). Name one phone which is competing RAZR cult (lets see what SCLP will do). Nokia literally lost the market with Motorola in mediun and high end stylish phones. And now LG is bombarding the market with Chocolate series. Yes, Nokia is coming up with N-Series, but that just eating PALM, MSFT and Blackberry market.
    and Why Nokia is investing heavily in Linux based WiFi Tablet.
    Qualcom will never reduce royalty. Loosing low end market is OK, in terms of gaining bigger future market. Afterall Bussiness/governance is all about hedging (why India in 1947 chose democracy with 5% literacy rate instead of one party autocracy ;).
    Cant say much. As I am in telecom company(but not working in any named company directly or indirectly).
    Cheers..

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