Qualcomm Inc (QCOM)

[khemara_qc]

Analysis: Qualcomm’s Acquisition of Flarion
Online staff -- Electronic News, 8/12/2005

http://www.reed-electronics.com/electronicnews/article/CA634589.html

Analysts at ABI Research have commented on Qualcomm’s decision to acquire Flarion Technologies and its Flash-Orthogonal Frequency Division Multiplex Access (OFDMA) intellectual property, saying that the $600 million move is one toward the broadband space.

“This acquisition is a clear signal that Qualcomm, despite its faith in the future evolution of its CDMA technology, wants to stake out some territory in mobile wireless broadband,” said the firm in a research note Thursday. “Though CDMA-based technologies such as EV-DO and UMTS/HSDPA have been touted as broadband wireless solutions, questions remain about their peak data rates, spectrum utilization, ability to handle IP and the triple play, and lastly their QoS capabilities.”

At the same time, ABI explained, there is industry consensus that OFDM with MIMO could be the technology of the future even for cellular.

The acquisition raised questions concerning wireless. WiMAX, an up-and-coming wireless connection method, is synonymous with broadband. Why didn't Qualcomm just buy a WiMAX IC or equipment company, rather than a company creating proprietary solutions? Alan Varghese, ABI Research's principal analyst of semiconductor research, believes it is because Qualcomm likes to stay on the unbeaten path.

"Just as they forged their own trail for cellular telephony with CDMA technology, Qualcomm may want to avoid the industry standard path of WiMAX where competition will be high, control limited, and price erosion rapid, and instead build their own path."

And, he added, "Even if productization of Flarion's technology slows down with the advent of WiMAX, Qualcomm can still realize revenue from royalties and licensing of Flarion's considerable IP in OFDM and all-IP traffic."

ABI Research's Philip Solis, senior analyst of wireless connectivity, agreed.

"We believe that Qualcomm's move is a longer-term step to equip itself with the right technologies to offer operators a wider range of choices when 4G services finally arrive. In addition, FLO technology, one of the leading contenders for mobile TV multicasting, is based on OFDM," Solis said in the statement