Feeds

Qualcomm considers radical action as pressure mounts

Chipmaker feels the heat in face of likely EU probe

Providing a secure and efficient Helpdesk

Analysis Pressure is mounting on Qualcomm on all fronts, with CEO Paul Jacobs hinting for the first time that he might consider breaking up the company.

Although he made it clear this would be a last resort, the usually sanguine chipmaker is clearly feeling the heat of intensified calls for probes of its business practises (with a full EU investigation looking likely); a fresh round of legal battles with Nokia; and a new setback – an unprecedented decision by the IEEE standards body to suspend the activities of one of its taskgroups, 802.20, alleging undue influence by Qualcomm.

A radical rethink of processes and structures, especially as regards intellectual property licensing, is clearly essential for Qualcomm to answer its critics, and avoid a Microsoft-style situation where it spends years taking a defiant stand through a series of investigations that are costly to both the coffers and the reputation.

Like Microsoft, Qualcomm stands accused of tying together two aspects of its business – in this case, patent licenses and chip sales, rather than operating systems and applications – to achieve a quasi-monopoly and make it impossible for other companies to compete on a level playing field.

Arguably, unlike Microsoft, Qualcomm – whatever the rights and wrongs of the debate over its current business practises – would certainly be a success story even if its different activities were separated. It is an effective chipmaker, as the announcement of yet another improved quarterly forecast last week demonstrated, and has genuine technological advances that companies want to license, sometimes in spite of their political instincts (O2 signing up for Qualcomm's user interface platform, for instance).

So break-up need not be disastrous, though it would certainly reduce Qualcomm's advantages over its rivals as it seeks to extend its power beyond its native CDMA sector and into the whole 3G plus market – including chips for W-CDMA and, in future, China's TD-SCDMA, plus chips and patents in OFDM technologies.

Jacobs told the media last weekend that if a break-up were necessary, "then that's what we're going to do. But we expect that we're going to be able to keep the company together".

Following complaints about Qualcomm's business practises made to the EC last October by Ericsson, Nokia, Texas Instruments, Broadcom, NEC and Panasonic, the parties are waiting to see whether the Commission decides to launch a formal probe. Jacobs admitted: "I guess I won't be surprised if there is an investigation."

Broadcom has also filed anti-trust suits and complaints in the US, claiming that Qualcomm ties its intellectual property licensing and chip contracts together unlawfully. The key complaint in Europe is that Qualcomm is not reasonably licensing its patents, charging the same rates on W-CDMA as on its own CDMA2000 even though its share of the intellectual property is far smaller.

Jacobs responds that the royalty rate is a low single-digit percentage, and the company makes a virtue of a single rate that covers all its platforms, including the emerging OFDM products.

The OFDM issues

These products and their associated patents – most importantly the Flash-OFDM broadband wireless network acquired with Flarion and the FLO mobile broadcasting system – are critical to Qualcomm's bid to retain a key role in next generation mobile communications, even as the 3G platforms, all underpinned by its core CDMA technology, gradually give way to a far more varied 4G picture, with OFDM the key foundation.

Qualcomm has set about drumming up industry support, and licensing revenue, for its OFDM architectures in anticipation of this shift. On the mobile TV side, the FLO Forum is growing (see inset) and the chipmaker has taken a lead in multi-radio integrated chipsets that support not just MediaFLO but other likely standards (see separate item about Siano).

Security for virtualized datacentres

More from The Register

next story
HBO shocks US pay TV world: We're down with OTT. Netflix says, 'Gee'
This affects every broadcaster, every cable guy
Same old iPad? NO. The new 'soft SIMs' are BIG NEWS
AppleSIM 'ware to allow quick switch of carriers
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Brits: Google, can you scrape 60k pages from web, pleeease
Hey, c'mon Choc Factory, it's our 'right to be forgotten'
Of COURSE Stephen Elop's to blame for Nokia woes, says author
'Google did have some unique propositions for Nokia'
It's even GRIMMER up North after MEGA SKY BROADBAND OUTAGE
By 'eck! Eccles cake production thrown into jeopardy
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.