Qualcomm Inc (QCOM)

[Mindy]

Deal will put RealPlayer on cell phones

Monday, March 22, 2004

By DAN RICHMAN
SEATTLE POST-INTELLIGENCER REPORTER

http://seattlepi.nwsource.com/business/165701_realnetworks22.html

Qualcomm Inc., a San Diego-based maker of electronic components for cell phones, has licensed RealNetworks Inc.'s RealPlayer and will begin producing chipsets with built-in players for use in cell phones by July 1, the companies said yesterday.

The deal opens a large new market for RealNetworks, said Ian Freed, vice president of mobile products.

Qualcomm's chips are used in more than 95 percent of all CDMA-based phones and in phones using the emerging successor to CDMA (Code Division Multiple Access), called W-CDMA, Freed said.

Of the estimated 580 million cellular handsets that will ship this year, 25 percent will use CDMA, according to Gartner Group analysts.

CDMA phones are less expensive than those using the rival GSM (Global System for Mobile Communications) technology, and they ship in greater quantities, Freed said.

Makers of cell phones using Qualcomm's chipsets include Samsung, Motorola, LG, Sanyo, Kyocera, Hitachi and Siemens. Those companies will begin producing phones using Qualcomm's chipsets by year-end, he said.

RealNetworks already has agreements with makers of GSM chipsets, including Texas Instruments, Intel, ST Microelectronics and Ericsson Mobile Platform. GSM chipsets are used in phones made by Nokia, Ericsson, Samsung, Siemens and Motorola.

Of the nation's six major cellular carriers, Sprint, Verizon and AT&T Wireless are currently offering audio and video content to subscribers, Freed said.

T-Mobile and Cingular are exploring video messaging. Nextel is still exploring the market.



Freed wouldn't disclose the terms of the licensing agreement or how it might affect the company's revenues.

But analyst Seamus McAteer, of San Francisco's The Zelos Group, said the deal positions RealNetworks to outflank archrival Microsoft Corp. and to net a tidy profit.

"While Microsoft is nowhere, really, except on handsets numbering in the single millions, RealNetworks is already at 7 million units, and through its relationships with handset makers it will be well into the tens of millions by the end of this year," McAteer said.

The increased presence of RealNetworks' player on handsets could lead to greater sales of its software used to stream content, and to revenue from providing the content itself, he said.


More headlines and info from Downtown.

P-I reporter Dan Richman can be reached at 206-448-8032 or [e-mail]