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courtesy of Peterk on the moderated.
Is this a positive for Q? Has Vodaphone become the outside mediator?
Vodafone Opens Door To Nokias Ovi Web Portal
--------------------------------------------------------------------------------
Dow Jones Real-Time News for InvestorsSM
09:21 a.m. 11/07/2007
By Adam Ewing and Daniel Thomas
Of DOW JONES NEWSWIRES
STOCKHOLM (Dow Jones)--Nokia Corp. (NOK) Wednesday received strong backing for its Internet strategy, with global operator Vodafone Group PLC (VOD) throwing its support behind the handset maker's "Ovi" music and Web-services platform.
Vodafone, the world's largest mobile operator by revenue, has agreed to work with the Finnish handset giant to integrate a number of Internet services, including Nokia's Music Store, on to devices that will begin selling early next year.
Until now, some analysts had believed that Nokia faced a backlash from mobile phone operators, fearful that the world's largest mobile phone maker would cannibalize their revenue streams.
"It's a huge endorsement. Having someone with the caliber of Vodafone on board is a very good sign," Nokia spokesman Steven Knuff said. "We're in discussions with a lot of operators, and things are looking well. I know more are coming."
Vodafone, which is increasingly trying to offset declining voice call prices by launching new Internet-based services, will combine its own software services, with Nokia's Ovi portal and will launch a number of exclusive "premium" Nokia handsets in 2008, the company said.
"This is a huge deal. It is a watershed endorsement for Nokia and its Ovi strategy," said Ben Wood, an analyst at telecommunications research company CCS Insight.
"The popular opinion has been that there's a huge operator backlash to Ovi, but this is a huge tier one global operator, following on from Telefonica the other week, endorsing the service. It's gaining significant momentum," he added.
Nokia and Vodafone said the agreement will give customers a better choice of Internet services, content and browsing tools.
The news comes on the heels of an earlier pact between Nokia and Spain's Telefonica SA (TEF), aimed at providing users with access to the Internet services of both companies.
Vodafone - which was conspicuously missing from Google's open handset alliance earlier this week - has been guarded about its Web-browsing service in the past. The first version of its Vodafone Live! mobile portal took a "walled garden," where all content was kept locked within its own mobile Internet portal.
However, this changed following a strategic turnaround by Vodafone Chief Executive Arun Sarin in May 2006, where the company said it would look to target an additional 10% of group revenue, or about GBP3 billion (about $6 billion), from new services, including broadband, mobile advertising and Internet services by 2010.
Since then, Vodafone has signed deals with eBay (EBAY), Google (GOOG), Yahoo! (YHOO), Microsoft (MSFT), MySpace and YouTube to put their Internet applications on Vodafone's mobile Internet browser.
"In supporting Ovi, Vodafone is effectively admitting that its efforts to create user loyalty through branded services have failed," said Nomura analyst Richard Windsor, who added that mobile operators have struggled to create there own Internet services.
However, as a result, Vodafone now stands to make some money from its branded Internet services, Windsor said.
"Vodafone is likely to see more success with Ovi than if it goes it alone and could even cut costs to boot," he said.
Frank Rovekamp, Vodafone Group's global chief marketing officer, said the deal was likely to drive greater usage of mobile Internet services, as it would make it easier for people to access and use services. Billing systems would also be better integrated, he said.
Rovekamp told Dow Jones Newswires that Nokia and Vodafone would share revenue on maps and computer games used by customers. However, their two music services would remain separate with the current sharing agreement in place.
"I see this as revenue enhancing. I don't believe it will push up customer acquisition costs," he said
Taken from the new Mod board:
From: peterk 9/26/2007 4:51:30 PM
of 1441
Another Win For Qual? Courtesy of SmallCapPm on Mod:
BERNSTEIN RESEARCH
Qualcomm wins another one vs. Broadcom. The Broadcomm vs. Qualcomm story at the Santa Ana
Federal Court took another turn this week, as the court agreed to reopen its finding of "willful
infringement" by Qualcomm, in light of a higher court's ruling in an IPR case that clarified and tightened
the definition of "willful". The court will begin to consider arguments to set aside its previous judgement
for doubled damages of $38.2M at a hearing on October 15th. Meanwhile, hearings on Broadcom's
request for an injunction will be delayed pending the outcome of this hearing, which could require
repeating the penalty phase, or even the whole trial. Now, even in the very unlikely case that Broadcom
could win an injunction, it would not be granted for several months and would likely be stayed pending
appeal, which would render the point largely moot. With the threat of an injunction effectively neutered,
we believe Qualcomm gains the upper hand in negotiations with Broadcom, likely forcing a settlement at
favorable terms sooner rather than later.
• ITC action against Nokia has no downside for Qualcomm. Meanwhile, Qualcomm began arguments
in its ITC complaint against Nokia. Qualcomm is asserting that ten of its patents are infringed by Nokia
GSM and WCDMA products and is asking the ITC to embargo the importation of these handsets into the
United States. Should this embargo be granted, it would greatly increase the leverage that Qualcomm has
in its licensing negotiations with Nokia, as Nokia has made the U.S. market a strategic priority and such
an embargo would make impossible for the company to compete. Should the ITC decline to impose an
embargo, the relative negotiating positions would be unchanged. We continue to believe that the balance
of power in these negotiations favors Qualcomm, but that the two companies may wait for several
ancillary legal skirmishes, such as this ITC complaint or arbitration over whether the companies' previous
pact has been implicitly extended, to reach initial judgment before completing their negotiations
From: peterk on the moderated Here is ML's take on Motorola's announcement. They still rate the Q a buy with target at 60.
Limited scope for Qualcomm at Motorola
Motorola’s comments at its Analyst Day suggested that Qualcomm’s position in
WCDMA chips is more limited than perceived before. We explain the issue below,
and note that it does not change our positive stance on the stock. We do not
make any changes to our model, given that Motorola is still expected to launch
Qualcomm-based handsets in 1H2008 and given that we did not change our
market share assumption back when Qualcomm announced the win.
Understanding the background
Motorola, like Nokia, is focusing on a platforming strategy, implying that many
types of handsets, including future models, are based on the same platform,
gaining better economies of scale via component reuse, quicker time to market
and shared R&D resources. As such, Motorola and Nokia prefer to only buy the
baseband chip (not the entire off-the-shelf product), customizing it to their
platform, and using their own modems, software and other components.
Qualcomm has taken the other approach, supplying its customers with complete
and integrated chips, including the software elements. While this strategy enabled
smaller players to “outsource R&D” to Qualcomm and reduce time to market, it
worked against the platforming strategies of Motorola and Nokia.
Motorola’s relationships with Qualcomm
Recently, Qualcomm announced it will be providing WCDMA chips to Motorola,
raising hopes of it becoming a key vendor. However, Motorola apparently sees
Qualcomm as a gap-filler, enabling it to quickly overcome market share losses in
WCDMA, temporarily putting aside its platforming strategy. However, over time
Motorola intends to shift to vendors that will be willing to design a chip to
Motorola’s specs. While some investors tried to paint Motorola’s comment in pink
colors, calling for some confusion in the message, our discussions confirmed the
temporary nature of Qualcomm’s business with Motorola. Qualcomm said in
return that it believes that one temporary phone will be followed by another
temporary phone, leading to a permanent flow of temporary products.
Game is not over though
Per management, Motorola is now discussing with semiconductor vendors (including
Qualcomm) a second source position, in addition to TI. Qualcomm management told
us that it is not ruling out adhering to Motorola’s requirements, given the size of the
customer. This leads us to believe that Qualcomm’s business with Motorola could
develop over time (in the positive scenario) into a relationships that resembles the
Motorola/TI relationships, implying higher volumes but lower ASPs and margins, given
that it may not include all of Qualcomm’s offerings, especially its software.
zamia- More importantly it takes shares off the street that can be used to borrow by short sellers. A friend recently told me that some lenders are offering up to 20% interest to borrow stock for short sells.
From:PeterK moderated
UPDATE 1-U.S. upholds import ban on some cell phones
--------------------------------------------------------------------------------
Reuters U.S. Company News
5:15 p.m. 08/06/2007
WASHINGTON, Aug 6 (Reuters) - The Bush Administration said on Monday it was upholding an order by a federal trade agency that banned imports of some cellular telephones containing Qualcomm Inc (QCOM) chips.
"I have decided to permit the limited exclusion order and cease and desist order (the 'orders') that the USITC issued in its investigation," U.S. Trade Representative Susan Schwab said in a prepared statement.
The U.S. International Trade Commission's June 7 order had banned imports of cell phone models using Qualcomm chips that had been found to infringe a Broadcom Corp (BRCM) patent. The ban excluded phone models already being imported June 7.
Qualcomm had asked the administration to invalidate the decision by the ITC, which determines whether imports hurt U.S. companies.
The second and third biggest U.S. mobile service providers depend largely on phones with Qualcomm chips for their high- speed wireless services.
The No. 2 U.S. mobile service provider, Verizon Wireless had been supporting Qualcomm in its patent dispute against Broadcom. But on July 19, Verizon announced it would pay up to $200 million in licensing fees to Broadcom to avoid the ban.
"While we recognize legitimate concerns that certain market participants and others have expressed regarding the potential effects of these orders, we believe that steps are being taken to address those concerns," Schwab said.
As part of the administration's review, U.S. trade officials consulted closely with the Department of Homeland Security, which said it does not believe there were sufficient public safety risks to justify denying the exclusion order.
Broadcom's offer of royalty-free public licensing to state and local public safety organizations and its licensing agreements with two major wireless carriers were a factor in DHS's judgment, Schwab said.
"We also understand that other market participants are investigating the use of a non-infringing software work-around. We believe that such licensing agreements and work-arounds will address in large part the concerns raised about delay in 3G network deployment," Schwab said.
Verizon Wireless, owned by Verizon Communications (VZ) and Vodafone Group Plc, also withdrew its support for Qualcomm's request for a presidential veto of the ban.
Sprint Nextel Corp (S), the No. 3 U.S. mobile service provider, has said it is working with its suppliers to avoid any disruptions arising from the ban.
The technology patent in question extends battery life in phones when they are outside the range of their network.
The ban on new phone models with Qualcomm chips would also hurt mobile phone makers such as Samsung Electronics Co Ltd <005930.KS> and LG Electronics Inc <066570.KS>. (Reporting by Doug Palmer)
UPDATE 1-U.S. upholds import ban on some cell phones
--------------------------------------------------------------------------------
Reuters U.S. Company News
5:15 p.m. 08/06/2007
WASHINGTON, Aug 6 (Reuters) - The Bush Administration said on Monday it was upholding an order by a federal trade agency that banned imports of some cellular telephones containing Qualcomm Inc (QCOM) chips.
"I have decided to permit the limited exclusion order and cease and desist order (the 'orders') that the USITC issued in its investigation," U.S. Trade Representative Susan Schwab said in a prepared statement.
The U.S. International Trade Commission's June 7 order had banned imports of cell phone models using Qualcomm chips that had been found to infringe a Broadcom Corp (BRCM) patent. The ban excluded phone models already being imported June 7.
Qualcomm had asked the administration to invalidate the decision by the ITC, which determines whether imports hurt U.S. companies.
The second and third biggest U.S. mobile service providers depend largely on phones with Qualcomm chips for their high- speed wireless services.
The No. 2 U.S. mobile service provider, Verizon Wireless had been supporting Qualcomm in its patent dispute against Broadcom. But on July 19, Verizon announced it would pay up to $200 million in licensing fees to Broadcom to avoid the ban.
"While we recognize legitimate concerns that certain market participants and others have expressed regarding the potential effects of these orders, we believe that steps are being taken to address those concerns," Schwab said.
As part of the administration's review, U.S. trade officials consulted closely with the Department of Homeland Security, which said it does not believe there were sufficient public safety risks to justify denying the exclusion order.
Broadcom's offer of royalty-free public licensing to state and local public safety organizations and its licensing agreements with two major wireless carriers were a factor in DHS's judgment, Schwab said.
"We also understand that other market participants are investigating the use of a non-infringing software work-around. We believe that such licensing agreements and work-arounds will address in large part the concerns raised about delay in 3G network deployment," Schwab said.
Verizon Wireless, owned by Verizon Communications (VZ) and Vodafone Group Plc, also withdrew its support for Qualcomm's request for a presidential veto of the ban.
Sprint Nextel Corp (S), the No. 3 U.S. mobile service provider, has said it is working with its suppliers to avoid any disruptions arising from the ban.
The technology patent in question extends battery life in phones when they are outside the range of their network.
The ban on new phone models with Qualcomm chips would also hurt mobile phone makers such as Samsung Electronics Co Ltd <005930.KS> and LG Electronics Inc <066570.KS>. (Reporting by Doug Palmer)
It's interesting to note that you never here from Limtex or Ruff when the stock is appreciating unless you call them on it.
This would be the time that having a Qualcomm chat room on their website would be valuable. Could ask management their thoughts on the press release. Of course they might not comment.
Dumb lawyers is an oxymoron!!!
It took the court almost 60 days and over 8 pages of explaination to figure out they did not have jurisdiction.
DR-I got the same impression. I believe Qual wants to drive a stake into Brcm's heart. If they get the veto or win on appeal Brcm had no negotiating leverage to receive favorable terms for a Q license. Qual. would never publicly admit they had a work around while requesting a veto or filing an appeal they would look like idiots for wasting everyone's time and money. However Brcm needs a license from Q to get into the game. Even their most recent press release harps on the FRAND nonsense that has been perpetrated by Nokia et al. What did Brcm get financially from the ITC's action-zip. They get basically nothing from their Santa Ana win. They still don't have a license and they're not going to get one if they continue to go down the path Paul J suggested they were going down. Brcm has shot off all their bullets. Qual. has reduced the # of lawsuits that can financially hurt them and the only remaining obstacle is Nokia who should be concerned over the recent ITC ruling.
Whom would you be pissed-off at Brcm or Qual or both?
The best thing about Qualcomm's recent news is that we don't have to here from the Punk.
This interview was posted on the moderated by Slacker711
I've said it before....Andrew Gilbert really does a good job of representing Qualcomm in Europe. This is a long interview and it is easier to read at the link, but I think it is worth posting in case the link goes down.
http://www.telecomredux.com/index2.php?option=com_content&do_pdf=1&id=3518
Insightz: Qualcomm - change is happening
(Wednesday, 06 September 2006) -
With a major presence in multiple cutting edge wireless technologies, Qualcomm’s views on industry developments are
likely to be highly significant. Andrew Gilbert, European President of Qualcomm, has been talking to TelecomRedux.
TelecomRedux: How is Qualcomm Europe developing? At one time the Qualcomm presence in Europe was quite small.
Andrew Gilbert: Yes, in 2001 there were probably only six or seven Qualcomm people across the whole of Europe. In the
last two or three years there have been some acquisitions, such as Trigenix and elata, and most recently Flarion. There
are now some 400 Qualcomm people in Europe at least half of which are in the R&D/engineering side. We are doing a
lot of work now in Europe and I don’t think that is well known.
TR: It is easy to assume that everything is going on in San Diego.
AG: Yes but when I talk about what I want to do in Europe, I want to turn it into a European Qualcomm. At the moment
we have lots of people running around with Qualcomm Europe badges on but it is not really there yet. The whole concept
of organic growth is good and acquisition is going to be essential as well. We need to grow a substantial force because
we have to do more locally.
TR: Europe is historically a no-go area for Qualcomm, harking back to the infamous tech wars. There are still ongoing
IPR disputes for example.
AG: I think that is the last bastion of that battle. If you look at the holy wars over the technology I genuinely think we are
past that. Everything I hear from the operator side is that they actually see that Qualcomm has moved from being a sort
of pariah to being a player in the industry. We have twenty full time engineers helping on the engineering services group,
for example, who are working on thirty three UMTS network optimisation. So they are helping operators to optimise their
UMTS networks, you know how badly performing they were in the past. I think firstly Qualcomm came in and we
understood CDMA, and two we threw the equivalent of about forty full time people at the standards bodies where we are
probably the biggest single contributor to the 3GPP process. We have helped to re-architect 3G in Europe and we have
helped bring in and specify HSDPA and HSUPA. Finally the chipsets. We were the first people to design and provide a
form factor accurate test handset. We did this locally in Farnborough. This was a major breakthrough and after that we
started bringing through the chipsets that enabled all the devices to come out. We were eighteen months ahead of the
market with HSDPA. So the point is that you have these really measurable things we have done over the last two to
three years which gives the operators confidence that we are players.
The royalty/IPR thing is probably the last vestige of concern. Before we move from what I like to think of as being a
player in the industry to being a partner to the industry in Europe, we need to get across to people what our business
model is, what it is not, why some people like it and some don’t and what it means for industry.
TR: Operators are very focused on generating revenues and don’t really want to be involved in IPR disputes. So we are
only talking about the vendor community and in fact probably only about a small part of that community. IPR is very
valuable and so people are very passionate about it.
AG: I think operators have changed, they are now much more desirous of controlling their own destinies. They feel that
they have not had in Europe the same success with 3G that perhaps other parts of the world have had and certainly not
in line with their expectations. So they felt they were lead a little bit along a path by the vendors on issues such as cost
and performance. They were not sure of the cost when they signed up to it and they thought they were signing up to a
certain voice and data performance that they have not yet achieved. So their view for the next generation is that they are
going to strongly influence where that goes. So I think that you are now seeing the start, with the NGMN group, of
operators taking charge of their own destinies. Not dictating to vendors because it has to be done in collaboration but
certainly sending a strong message to say that they need a certain level of cost and performance and we need to work
together to achieve this. There will be a change there.
I agree with your assessment of IPR. I don’t think Qualcomm has helped itself. What we did was recognise that IPR
disputes eventually work themselves out, so why do we need a public debate? Why not just wait until the issue plays
itself out in the courts. I don’t think that was a good thing. What I want to do, certainly in Europe, is to be much more
transparent, given our confidentiality agreements, about how the whole IPR royalty model works. It does have a lot of
benefits but until people understand the structure and how it works and what it delivers, there is going to be a lot of illinformed
debate. What people need to recognise is that many vendors have a different self–interest than operators or
even us. Until you understand everyone’s perspective with the model it is difficult to make a judgement.
TR: Can you give us your view on the evolution of mobile technology?
AG: The thing I want to talk about is the rise of the next iteration of 3G which is HSDPA and HSUPA. There has been a
lot of press speculation over the failings of 3G but I would say that 3G has done a great job of reducing the cost of
delivering a voice minute and it has done a great job of delivering a kind of ISDN/dial-up feel of data. But it has not done
a great job of delivering on all the high speed broadband style of data that we had all expected, or hoped, it would. Now
we are finally, finally with this HSDPA phone we have the form factor, the battery life, the look and feel that is as good if
not better than GSM, we also have download speeds of 1.8Mbits/s (soon to be 3.6Mbits/s) so we are actually getting to
the point where 3G delivers something over and above what GSM has done. My fear when I read the press is that we
are in danger of pulling up the plant to see if the roots are growing and destroying the plant in the process. We are just
about to see that plant bloom.
TR: We have had for some time the over selling of technology. 3G was oversold, it was a bad compromise in the first
place, so making it work was always going to be difficult. What we are facing therefore is the problem of doing a fix on 3G
and that fix is HSPA. I am sure that this will work but my concerns is that expectations have been raised again, perhaps
too far - after all it was only a year ago that people were shouting that HSDPA would do 14.4Mbit/s and the first iteration
is 1.8Mbits/s.
AG: I agree there is no need for that, what you are saying is that it is 14.4Mbits/s theoretically when you are standing
next to base station. Let us back off from that and say what does the experience feel like? Let us to talk about it in terms
of how easy it is to download a music track. I prefer to think of HSDPA in terms of finally allowing operators like Vodafone
to move from downloading ringtones to downloading full music video in a reasonable timeframe rather than saying you
are going to receive X amount of bits.
I think the speed is important but the real thing for the vast majority of users is how easy is it to use and do I get out of it
what I want to get out of it?
However, I don’t want to oversell HSDPA because I think it is the first part of what I think is a two stage process. The first
part is dealing with the asynchronous traffic which is downloading reasonable amounts of data onto a device, a data card
or handset. So you can download music and videos and you can Web surf in a more reasonable way.
The next thing which is equally if not more important is HSUPA which will be coming out in 2007 which will deliver the
uplink experience. You can then have two things. You can have high speed uplink service and you can have decreased
latency, so you are getting into the sub 100 milliseconds latency which is the critical point where you can have highly
interactive data traffic. Then you can get into things like multi-player online gaming and websurfing. You can get into
things and use enterprise applications that you cannot currently do.
The two stage process of HSDPA today will allow people to use technology as a better download mechanism and then
HSUPA, which we support and have recently successfully tested, will complete the circle to allow what some people call
the ‘I Generation’ or the ‘MySpace’ generation to do stuff they have not been able to do before on a mobile device. They
could take pictures or record video clips when they are out with their friends or on holiday and then send it as a postcard.
It will allow people to do things that they are doing on the Web today but mobilise it. I firmly believe that mobilising an
existing application is the secret of success in terms of money. We mobilised voice and created a massive industry, we
are in the process of mobilising broadband download with HSDPA. With HSUPA we will mobilise much more interactive
traffic. So this next eighteen months will finally give us what we wanted out of 3G: we have proved the applications in a
fixed line environment and the operators are moving towards this fixed mobile convergence world where they do want to
be able to offer the same experience going forward and I think that HSPA will do that.
The interesting thing, as a final stage, is capacity. There is a need to drive up capacity to deliver the user experience
across millions of users. The evolution of HSPA into LTE will allow operators to scale to much higher capacities and to
continue to track the wireline evolution. For the first time this will be something that will differentiate 3G.
TR: Is capacity going to be an issue if everyone starts sending data heavy traffic through the networks?
AG: It is a law that when you give somebody something that is new they use it much more. So you go from being a
megabyte user to a gigabyte user. Operators have to deal with capacity and deliver it at a cost point that is reasonable.
HSPA has years in it, it is not going to run out of juice at any time soon for two reasons. HSPA will begat HSPA+ which
will improve efficiency so you will continue to wring more from the current spectrum. Also we have announced, launched
and tested UMTS 900 so we are also going to go through an evolution over the next couple of years of re-farming the
900MHz GSM spectrum and re-profiling it for UMTS. So there is going to be a whole lot more spectrum opening up for
these services.
When I talk about the capacity issue I talk about it in the 2010-2012 and beyond timeframe when you really are ramping
up to millions and millions of gigabyte customers and that is when you need to go the step beyond. That is the initiative
the NGMN group is addressing and LTE.
TR: When you refer to NGMN you are talking about the group of major operators who are getting together to promote
4G?
AG: They have not actually used the term 4G but yes. NGMN is a group of operators who have a vision for beyond 3G.
The current bodies as they stand address 2 and 3G. NGMN are looking beyond HSPA and are saying we want to take
control of our own destinies, we want to strongly influence, not the technical specifications, but the cost performance
curve for the next generation. To do that we have formed a body to help industry by coalescing our views, giving a
common voice to say these are the things that are important to us, these are the industry priorities you should work to in
order to deliver what we want beyond 3G.
I don’t think this undermines any existing body. People have asked me if it undermines the standards bodies such as
3GPP and the reality is it does not because NGMN have stated quite clearly that their default route is to pursue 3GPP as
a standardisation process for achieving the performance goals that they want. All those folk who are also on 3GPP are
strong supporters of the 3GPP standards process but what they are doing is sending a clear message to say as part of
this process, as you achieve our goals you must listen to us, you must hit these performance curves, you must hit these
time frames, and you must deliver this commercial environment.
TR: Earlier you mentioned the Qualcomm IPR/royalty model. Can you go through the model and explain how it works?
AG: We are involved in every part of the value chain; we provide the user interface which we call UIOne which an
operator can scope out for their own purposes and O2 is already implementing it; we have the BREW content download
platform; you have the chipset; the technology of the air interface; the engineering optimisation services and handset
acceptance services, so we do the whole end-to-end value chain. But we are not trying to sell you a handset and we are
not trying to sell you a base station. So we are kind of unique as a vendor independent wireless technology partner to the
operator. And we support a vast vendor ecosystem to help go after that market. So in many ways the operators see
Qualcomm now in Europe as very much a potential partner, somebody who has the same kind of risk profile. We don’t
really make the money until the operators can create and sell the services. We are not selling base stations or handsets
so it is not until the operator starts making money and starts shifting handsets in volumes that we start to make money
from royalties or chipset revenues. So we are very aligned with making it a success so that has helped us to be part of
the process.
TR: So you would you regard yourself as the third party that stands outside of the direct vendor/operator relationship with
a foot in both camps but able to give independent advice?
AG: Absolutely, I think we have bridged the two in many senses. If you think of the WCDMA situation where they found
themselves in a bit of a challenging position in terms of network rollout, we were the ones who stepped in to try and help
make it work. For all the moaning of some of the vendors if it wasn’t for Qualcomm much of this stuff wouldn’t have
worked. We wouldn’t have got HSDPA to market so quickly. So there is a recognition from the operators that we do that
and we even get some respect from the vendor community.
There are some vendors, notably the traditional GSM vendors, who see this as disruptive to their business model. If you
think about it what Qualcomm does is we innovate, we come up with new pieces of technology and then we make that
technology available. We license our technology to over 130 companies worldwide and in return they get certain rights to
our technology. So when we sell our chipsets the buyer not only gets our hardware and software, they also get our
patents, the rights to use our innovation and we pass on to them all the rights we have negotiated from other vendors.
From the buyer’s point of view that is really valuable. A vendor can bring to market a multimode phone, that is a 3G and
GSM phone into the GSM market but because they are using our pass-through rights to other people’s patents they don’t
have to negotiate with other patent holders. They only have a single, low digit royalty rate to pay and not multiple rates to
multiple companies.
Think about that. Up to that moment all the traditional GSM vendors had that market kind of closed off. They had done
their cosy cross licensing deals on GSM and so they had the market pretty well locked up. If anyone wanted to enter that
market, as indeed they did, they had to pay a huge tax because they had to pay each of these people for bilateral
agreements on royalties. What Qualcomm did, because we brought CDMA in and that gave us a lot of negotiating power
on behalf of industry, we were able to negotiate with all the GSM guys, gain the rights to their technology in return for
ours, we passed that on to our customers so they did not have to pay them twice. So we have reduced the stacking of
royalties.
We have become quite disruptive to some of the previous incumbents. If you look at the GSM handset market there were
relatively few players and they had the market locked. If you look at the WCDMA market the picture is quite different with
many many new vendors and you have considerably less market dominance by one or two major players. The reason for
this is that Qualcomm has been able to level the playing field and given operators much greater choice in terms of
handset vendors. And we have been able to drive down the prices accordingly.
Whilst that is great for the operators and the new entrants and the consumer you can understand how some people are
less than happy about that. My point is that operators are now seeing when Qualcomm comes on the scene and the
number of OEM vendors goes up, the average selling price trends down. We encourage choice which is seen as a
positive thing by the operators.
TR: This must be good for the operator and consumer because it brings in more players which means more competition
and more innovation.
AG: It is important to let new players into the market. Why shouldn’t people be able to get access to this innovation and
new technology. We talk about Qualcomm enabling choice. Whilst I understand that some companies have invested a lot
of money in protecting their brand, and good luck to them, that is not our business model, our business model is helping
operators to deliver more choice to the consumer. So there is always going to be that tension.
TR: So you are saying that this business/royalty model is spreading the availability of technology to a wide group?
AG: Take a look at how the model works. There is the operator who takes much of the risk in coming up with services
that customers will want. So how is this funded? We take R&D, come up with ideas, and then make it available as IPR or
through our chipsets to the manufacturer who is then able to build the networks and provide the devices. If they are
successful the operator buys the equipment and if the operator is successful the subscriber buys it which funnels
revenue back through this virtuous circle.
Where we are not making money is on the margin of the sale from the manufacturer to the operator-we are dependent
on this whole cycle working. So that is not where we are hiding our R&D, which is what some vendors are doing. That is
because they are making their margins on the equipment. We don’t do that, we are trying to drive down costs, we are
trying to drive up choice. We make available all our innovation on a complete portfolio so if you buy a licence from
Qualcomm you will find the cost is, on average, five per cent. So from the actual wholesale price of a phone for example
five per cent of that is paid to Qualcomm. We use that money to fund all of our innovation, all of our acquisitions - we
spent a billion dollars last year on R&D.
What we do then is make all that innovation available on the licence for one cost. Everything-not just essential IPR-all
IPR is available to our licensees. It is true of all our innovations which come as part of the package. Other vendors use
IPR in a different way. Their primary R&D budget is spent on innovation for their own products, which is quite acceptable.
So if they come up with a great user interface, for example, they patent it and use it to exclude others from having access
to that patent. This is a perfectly valid way of working with patents. Because of that they will be successful. The point is
that they will only license essential IPR, not all IPR.
Our approach is totally different, we take all of our innovation and license it on this five per cent or equivalent and
hopefully it is a success and we make it up in volume. If not it is back to the drawing board. When 3G was not successful
for example, we were making zero on any 2G phone that shipped. Yet we put in all those engineers to help optimise
networks, and forty staff to help in the standards process, to evolve WCDMA to the point where operators felt they could
deploy it. It was only then that we started to get a return on our investment over the last few years. So ours is a very
different model but for the operators it pays out well.
TR: One could argue that this investment and your historical CDMA patents put you in a unique position so this is not a
transferable model?
AG: No, but if we did not have the CDMA expertise and portfolio we would not have been able to participate in this
market. It is only that we have such strong innovation across the range of mobile that we have been able to take part.
People say we are so successful in our patent portfolio because we are so dominant. This is ludicrous. When we started
signing these 130 plus agreements we were a very small company; five years ago we didn’t have the horsepower of the
people we were signing with. We didn’t twist their arms. My happiness is that since talking to the operators they realise
that this virtuous cycle, where they invest money through the manufacturers, they help increase choice and decrease
cost. That seems to have got through to the operators but you are never going to convince some vendors.
TR: It is probably fair to say that historically Qualcomm has not helped itself. Some of the public positions you have
adopted have not been publicly appealing. So there has to be suspicion of your motives.
AG: I agree with you. I can’t speak about what went before; all I can say is that my approach is much more transparent,
more open, more collaborative, because I genuinely believe that Qualcomm are not the bad guys in this. I think they are
misunderstood and there is a reasonable case to be made. The proof of the pudding is in the eating and the operators
are eating. They are happy to see the phones, they are happy to deploy the technology that we have helped enable, and
so far all of the vendors are happy to pay the price. It will evolve over time. If we continue to innovate and earn our
stripes and contribute then we will continue to be successful.
TR: Thank you.
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from peterk(Moderated)
Verizon Picks Nortel for Five-Year US$2-bil. CDMA Contract
Verizon builds on existing agreements with Nortel to deliver CDMA networks with an expected new equipment and services contract.
Global Insight Perspective
Significance
Nortel is awarded a US$2-billion five-year CDMA equipment and services contract with existing customer Verizon Wireless.
Implications
Nortel has maintained and built on a contract with an existing revenue source that will help it to meet plans to achieve financial stability.
Outlook
The level of investment in CDMA networks by Verizon with Nortel has marginally increased, but it is not yet clear what Verizon's plans for the US$2.8-billion AWS spectrum acquisition are.
Nortel has announced that it has won a contract from Verizon Wireless for equipment and services valued at US$2 billion, upgrading and expanding the Verizon Wireless network. The contract runs for a five-year period and covers installation of CDMA 2000 base stations, switching, IP platforms, optical networking, related equipment, and professional services. The agreement builds on a July 2006 deal to supply Revision-A technologies. The announcement of the agreement also re-iterated the co-operation between the two companies in developing and deploying IP Multimedia Subsystems (IMS)-based applications and services (see United States: 28 July 2006: Verizon Wireless in IMS Initiative).
Outlook and Implications
Effect on Nortel: The contract is a significant win for Nortel, which has been struggling in recent years and selling assets including its loss-making UMTS unit to Lucent-Alcatel (see World: 5 December 2006: Alcatel and Lucent Finalise Merger; Nortel UMTS Arm Deal Closes, World: 23 November 2006: Nortel Outlines Recovery Plan, and World – Canada: 8 November 2006: Nortel Losses Narrow on Revenues Up 17%). However, Nortel already had a long-term contract with Verizon to expand and upgrade the CDMA network and this deal was expected. Running at US$400 million per year, it is close to Verizon's existing expenditure with Nortel, and while this win is likely to be vital to maintain the company's financial health it is not a new contract that would allow it to tap a new source of revenue (see United States: 4 September 2003: Nortel Wins US$1bn Contract from Verizon Wireless).
Verizon: Verizon Wireless has framed the deal as a continuation of improvements and expansion to the network. Verizon Wireless was the second-largest bidder in the latest AWS spectrum auction, paying US$2.8 billion for licences covering a population of 192 million (see United States: 19 September 2006: FCC AWS Auction Ends at US$13.9 bil.). This announcement provides a slight indication that the company is not just planning on spectrum hogging, as some industry watchers suspect, and does intend to expand coverage through continued investment and expansion of Verizon's network. This could include areas covered by these licences, but this will remain to be confirmed.
Mass Market Data: Following deals with user-generated video companies to deliver services to mobile users, the expansion of 3G video service areas is likely to be a significant component of strategy to maximise the revenue benefits that these services, popular with maturing youth mass market consumers, are expected to bring (see: (see United States: 28 November 2006: Verizon Wireless to Offer YouTube Videos and United States: 29 November 2006: Verizon Wireless Doubles Up on Video with Revver). A number of additional content deals have also been announced in North America that are indicative of a growing move to move data usage into the mass market (see United States: 17 November 2006: North American Wireless Services Move Forward). Although data usage has been growing and data revenues grew 69% year-on-year to an ARPU of US$7.16 or 14.1% of ARPU, this is still amalgamated with messaging revenues. Messaging is more rapidly accelerating as the United States' SMS system, which was notoriously late to market on interoperability and still suffers from image problems as an unreliable communications medium begins to stabilise and grows rapidly (see United States: 30 October 2006: Verizon Messaging Grows 150% Y/Y and NAFTA: 24 January 2003: SMS Interoperability Launched Between US and Canada). The economics that will dictate if high-speed networks move beyond more-densely populated key urban markets in the near future is still debatable and the exact nature (CDMA 2000 1x or Revision-A ) of the network deployments will remain to be seen, although Verizon notes that it has selected technologies based on easy upgrade paths which is indicative of measured expansion of EV-DO Revision-A.
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Punkin-Have you cut your lossess yet?
His popping off in Europe is the nature of the business since Sar/Oxly. CEO's need to decimate non-public material information if there is any chance that the information might be used by anyone to their advantage. Indicating that the cost of litigation could well be in the 100mm range takes the winds out of the short sellers strategy(short before the news, cover once the news is announced).
Biz- This subject has been rehashed several times. Qualcomm fired the first salvo I believe using the same study months ago. Nokia and its news agency (Reuters) are resorting to FUD because they have nothing better to offer. They look at the effect misinformation has on the American public (Iraq) and try to sow discontent amongst shareholders. Fortunately for Qualcomm it's stock is owned by institutions (70.1%). Unfortunately for small investors some get sucked in by the Fud and sell, which then plays right into the hedge fund players who trade on a short term basis. Look at the volume that takes the stock down compared to the amount needed to drive it higher. Very skewed.
Eye balling the last 5 years of earnings and the stock's response after earnings were announced, there only has been one time where the stock appreciated substantially after the announcement(July 2005). Generally speaking after the earnings announcement the stock trades flat to down.
Any thoughts on why IDCC dropped 20% over the last week and would you be a buyer at these prices?
Nok, Mot, Brcm reporting this week. Since Telecom hasn't really participated (actually large cap growth stocks have yet to participate)in this market advance it should be an exciting week if their #'s come out better than anticipated.
The market now likes Qualcomm more!!!
DJ JAPAN PRESS:Softbank Plans Cellular Broadband Svcs By 08
--------------------------------------------------------------------------------
Dow Jones Real-Time News for InvestorsSM
7:20 p.m. 09/12/2006
TOKYO (Dow Jones)--Softbank Corp. (9984.TO) plans to launch broadband Internet services on its mobile phones by 2008, the Mainichi Shimbun reports.
The Internet and communications conglomerate aims to provide data transmission at more than ten times the speed of current third-generation cellular handsets, and hopes to increase its market shares by offering multiple digital TV channels.
Softbank plans to use MediaFlo technology developed by U.S. mobile phone chip developer Qualcomm Inc. (QCOM), and offer contents from its Internet portal site unit Yahoo Japan Corp. (4689.TO).
Data_Rox
Unicom's GSM annual revenue per user had risen but still suffered from low margins and profit because of its congested network"
isn't this one of the reasons we own Q
Thanks for the info. Looks like all the majors are announcing right before July options expiration.
did you short idcc @ 35?
PUNK- any thoughts on IDCC today?
QUALCOMM Responds to Inaccuracies in Recent Korea Times Article on Expiration of Royalty Payments
SAN DIEGO, June 1, 2006 /PRNewswire-FirstCall via COMTEX/ -- QUALCOMM Incorporated (QCOM : QUALCOMM Incorporated
News , chart, profile, more
Last: 47.05+1.84+4.07%
5:31pm 06/01/2006
QCOM47.05, +1.84, +4.1%) , a leading developer and innovator of Code Division Multiple Access (CDMA) and other advanced wireless technologies, today reiterated its prior statement that the reports in two Korea Times articles (December 1, 2005 and May 31, 2006) indicating that certain Korean manufacturers' obligations to pay royalties to QUALCOMM under their respective license agreements will expire in 2006 for sales in Korea and 2008 for exports from Korea, are not correct. The version of the Samsung-QUALCOMM license agreement that the Korea Times claims to have seen is outdated and has been amended and extended several times with each manufacturer. While QUALCOMM cannot disclose confidential details of its license agreements, the obligations of licensed Korean manufacturers to pay royalties to QUALCOMM will continue beyond such dates (for both domestic Korean sales and exports), and there is no date on which a license under all of QUALCOMM's patents becomes royalty free. While we are also not able to disclose confidential details of our joint development agreement (JDA) with ETRI, QUALCOMM has previously disclosed to its investors that its sharing obligations to ETRI under the JDA do expire this fiscal year. However, the expiration of such sharing obligations under the JDA with ETRI does not in any way affect the royalty obligations of Korean manufacturers. It is unfortunate that an ETRI Director apparently has confused the terms of the JDA with ETRI with the terms of our separate license agreements with Korean manufacturers.
QUALCOMM's licensing program has fostered the widespread adoption of leading-edge technologies and promoted vibrant competition throughout the wireless industry, encouraging innovation, technological advancement and vigorous price competition. QUALCOMM has entered into more than 130 license agreements with the world's leading manufacturers of wireless equipment. QUALCOMM is very pleased that its Korean partners have, by combining QUALCOMM's patented technology with their own developments, joined a number of the Company's other licensees as world-class suppliers of CDMA equipment, as well as other technologies, throughout the world. QUALCOMM looks forward to its partners' continued success.
I agree. Or the Sanyo/Nokia deal could be bigger than I think. Nokia has stated that it might use Q chips, but they have said that in the past. Does the market believe that Nok is capitulating?
biz- Brcm is getting hammered today while the rest of the telcom sector is exploding, particularly he Q. You think the lawsuit might be going Q's way?
DataRox-Significant response by the Q since it's the first time I can recall that they've gone out of their way to combat misinformation. We should be grateful to the boards' members diligence in informing Q's investor relations and investor relations responding. Maybe the Q is no longer, under PJ's leadership, going to let these fud attacks go uncontested.
from bdazz on the moderated:
Word from QCOM investor relations to my question about today's Korea bull. I linked the story and this was the QCOM reply:
>>These reports are incorrect. Per the contracts we cannot comment on the specific details of our agreements with our licensees; however, we can say that the royalty obligations will continue beyond the referenced date of August 2006. There is no date on which a license under all of QUALCOMM's patents becomes royalty free. In addition, QUALCOMM's patent portfolio continues to grow with thousands of new worldwide filings each year.
Remember too QUALCOMM has been very active in the standards bodies and in evolving and developing improvements to wireless technology and our essential and non-essential patent portfolio. Our patent portfolio has grown enormously since we first started licensing and today includes thousands of issued patents around the world. Further, we have, for the most part, extended our agreements with licensees to include our later patents that apply to the newer standards, such as CDMA2000 1X, 1xEV-DO, WCDMA/UMTS, HSDPA, etc<<
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40 million is light considering the news and today's market. You would expect traders to dump Q and pursue other opportunities. It seems even the shorts stayed away today if you consider that Q closed almost a point up from its opening.
Great buying opportuniy!!!
And your point is???
Samsung Electronics reveals new chip with MDDI technology
--------------------------------------------------------------------------------
M2
11:40 a.m. 07/01/2005
Jul 01, 2005 (TELECOMWORLDWIRE via COMTEX) -- The development of a new QVGA display driver IC (DDI) chip with serial interface technology has been unveiled by Samsung Electronics.
Samsung said its S6D0142 DDI chip includes Qualcomm's Mobile Display Digital Interface (MDDI) technology, which means that fewer wires are needed in the hinge of wireless 3G clamshell handsets to interconnect the LCD display with the Qualcomm Mobile Station Modem (MSM) chipsets.
The reduction in wire requirements reportedly means lower power consumption in slide and clamshell mobile handsets and ensures greater reliability. Samsung said that its S6D0142 also includes 1.3Mb of SRAM, source and gate drivers, timing controller and a power supply IC.
Comments on this story may be sent to tww.feedback@m2.com
(C)1994-2005 M2 COMMUNICATIONS LTD http://www.m2.com
It's called sar/oax
It's called sar/oax