Feeds

Nokia backs away from CDMA

And steps up battle of wills with Qualcomm

High performance access to file storage

Comment Just four months after announcing a CDMA handset joint venture with Sanyo, Nokia has cancelled the plan and its own R&D in the area, claiming the technology is "financially prohibitive", especially for emerging economies.

While the Finnish giant has steered clear of the ultra-low cost handsets spearheaded by Motorola, citing the impact on margins, it is formulating its own approach to the high volume growth markets such as Brazil and India—one in which it aims to sideline both Qualcomm/CDMA and the GSM Association's operator-driven handset programs. It is promising low cost 3G devices, but will focus entirely on UMTS, reserving any remaining CDMA activity for the US.

All this is part of the broader battle between Nokia and Qualcomm, which is epitomising many of the key issues for the cellular sector. Nokia may have failed in CDMA, but it is determined to blame the chipmaker and so strengthen its own case that Qualcomm’s licensing policies not only make it very hard for other chipmakers to enter the market, but also make CDMA financially non-viable for emerging markets.

It may be using its own weakness in this area as a stick to beat Qualcomm, but the latter is stepping up its own response, opening up many new options that will keep it competitive even if the CDMA market does decline - an outcome that has been predicted many times before, wrongly.

As for Nokia, the Sanyo decision, coupled with the new joint venture with Siemens on the infrastructure side, show new CEO Olli-Pekka Kallasvuo making some key strategic moves, and naysaying criticism that he would be unable to take decisive stands on key issues facing the company.

The most critical focus for handset makers this year is how to address emerging mass economies with low cost models and still retain decent margins. Nokia's conclusion – this isn't possible using CDMA. The Finnish giant has cancelled its proposed joint venture with Japan's Sanyo to combine CDMA handset operations, announced only in February, in a move that steps up its psychological warfare with Qualcomm another notch.

It claims the "financially prohibitive ecosystem" surrounding CDMA technologies make it non-viable as a platform for bringing mobile communications to the developing world – a thinly veiled stab at Qualcomm's levels of royalty fees for its core patents, which are at the heart of an escalating war with Nokia and others over the chipmaker’s business practises.

The two official reasons for ending the JV relate to ROI – the potential profits were outweighed by the level of investment that would be required, leaving Nokia to say "the terms and conditions of the proposed partnership were not satisfactory and in the best interests of Nokia's long term success" – and worsening market conditions – Nokia stated: "In addition to an already financially prohibitive CDMA ecosystem in general, recent developments may indicate that the CDMA emerging markets business case is looking more challenging."

As a result of the cancelled venture, Nokia will take a restructuring charge in the third quarter of this year of around $189m. Its main remaining focus will now be the US market, where Verizon Wireless, Sprint Nextel and Alltel are all engaged in major CDMA2000 updates.

Bill Plummer, Nokia’s head of external affairs, said: "We see the US market in general as a major and important wireless marketplace. Going forward, with convergence taking place - and mobility, frankly, being the value add for convergence - the US will be the leading market in that respect. We will have a special focus here in CDMA."

The anti-Qualcomm spin

Just as the announcement of the Sanyo JV at the 3GSM show earlier this year had a strong element of anti-Qualcomm spin about it – offering the prospect of a top three CDMA handset vendor that did not rely on Qualcomm's own chips, instead using those of Nokia's alliance with Texas Instruments – so the statements issued about the dissolution of the Sanyo partnership also reflect a broader Nokia position on the Qualcomm issue.

While the Finnish company will continue to pursue CDMA business in the US and address other opportunities ad hoc through original design manufacturers such as Korea's Pantech, it cannot be long before it exits this space altogether – it is already cancelling its R&D activities, which will be wound down by next April.

This strengthens two arguments beloved of the anti-Qualcomm camp – that the US company's market position makes it virtually impossible for any other chipmaker to enjoy commercial success in CDMA; and that the CDMA market is in decline anyway, with second generation CDMA operators likely to switch to UMTS, and new providers in emerging economies turning increasingly to GSM.

Kai Oistamo, head of Nokia Mobile Phones, said the high cost of making CDMA handsets, partly a result of Qualcomm's patents grip, makes the platform too expensive for emerging markets. "In this fragmented [emerging economy] market, making money with low end CDMA handsets is very difficult," he said. Nokia claims low end GSM phones have a 25 per cent price advantage over CDMA equivalents.

SANS - Survey on application security programs

More from The Register

next story
A black box for your SUITCASE: Now your lost luggage can phone home – quite literally
Breakfast in London, lunch in NYC, and your clothes in Peru
Broadband Secretary of SHEEP sensationally quits Cabinet
Maria Miller finally resigns over expenses row
Skype pimps pro-level broadcast service
Playing Cat and Mouse with the media
EE dismisses DATA-BURNING glitch with Orange Mail app
Bug quietly slurps PAYG credit - yet EE denies it exists
Like Google, Comcast might roll its own mobile voice network
Says anything's possible if regulators approve merger with Time Warner
Turnbull leaves Australia's broadband blackspots in the dark
New Statement of Expectations to NBN Co offers get-out clauses for blackspot builds
Facebook claims 100 MEEELLION active users in India
Who needs China when you've got the next billion in your sights?
Facebook splats in-app chat, whacks brats into crack yakety-yak app
Jibber-jabbering addicts turfed out just as Zuck warned
prev story

Whitepapers

Designing a defence for mobile apps
In this whitepaper learn the various considerations for defending mobile applications; from the mobile application architecture itself to the myriad testing technologies needed to properly assess mobile applications risk.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Securing web applications made simple and scalable
In this whitepaper learn how automated security testing can provide a simple and scalable way to protect your web applications.