Qualcomm sets cat among Wi-Fi pigeons with Airgo purchase

Political pawn or technology asset?

“RFMD hopes to become a broader development partner to Qualcomm's entire product portfolio for complementary products such as power amplifiers and front end modules,” said CEO Bob Bruggeworth. “RFMD is pleased that Qualcomm sees the value of our long term roadmaps for front end solutions. The sale of these assets is part of an ongoing relationship that we expect will continue to strengthen as we move forward."

Qualcomm estimates the combined effect of these acquisitions on its pro forma earnings per share to be dilutive by approximately $0.04 in its fiscal year ending September 2007, and modestly accretive in fiscal 2008. The acquisitions are expected to close by the end of December.

For Airgo, the acquisition gives the MIMO pioneer the chance to remain relevant in a sector that it led, but where it has been in danger of being sidelined by Intel and others. Like Flarion, it is a company with genuinely innovative technology and IPR, which took the gamble of trying to 'do a Qualcomm' and set new industry standards itself, rather than harmonizing with the giants’ efforts.

As we know, the memory of Qualcomm's success in this respect, coming from behind to set CDMA against GSM, has inspired many start-ups, but few of them achieve their goal, and they then become almost inevitable acquisition targets, often, ironically, for Qualcomm itself, which thrives on advanced technology that stays somewhat outside the industry party line.

Not that Qualcomm will seek to plough its own furrow in WLan. It is a member of the Wi-Fi Alliance, a contrast with its outsider status in WiMAX, and in the past year has reversed its old coolness towards 802.11 to become an ardent supporter, mainly from the point of view of supporting Wi-Fi in multimode chipsets alongside CDMA2000, W-CDMA and other radios.

Airgo will enable it to take a strong headstart in 802.11n as that standard emerges, although its recent promise of chips conforming to Draft 2 by year end is premature.

Broadcom and even the usually more cautious Intel are already announcing pre-standard products written to the current Draft 1, an approach previously criticised by Airgo, which claimed the draft is too unstable and that products created for it will need significant adaptation to support the final standard.

But market pressure is high and even Intel, which usually waits for finalized standards, is succumbing to the pre-802.11n pressure, announcing plans to put a pre-standard version of the technology into its Centrino chips by next year.

While Qualcomm will work within the 802.11n process, that is therefore still sufficiently fluid to leave room for it to try to influence the final standard and increase its own influence, and even if 802.11n is well down the track, it will have IPR to exert influence over future iterations and related wireless standards.

Qualcomm submitted its own proposal for 802.11n, which was rejected, and while we believe it is too late for it to use Airgo to suggest a significantly reworked specification to undermine the current Intel/ Broadcom-backed work in progress, it does put the weight behind the Airgo MIMO technology that the start-up itself lacked, and so may be able to slant the final 802.11n standard in its own direction (giving itself a technical headstart if not, given the auspices of the Wi-Fi Alliance, an IPR one).

As if to stress the technological headstart it believes it will have from Airgo, Qualcomm's acquisition announcement coincided with a claim from Airgo that it now has chipsets available that comply with Draft 2 of the 802.11n standard and are also backwards compatible with Draft 1.

This seems far-fetched given that Draft 2 will not be voted on until March 2007 and Qualcomm may have its own views on how that vote should go. At the most recent meeting of the 802.11n taskgroup, last month, it was made clear that 370 technical comments are still left to be addressed (12% of the total) with expected approval on the resolution of those comments by the January meeting.

Only after that can the ballot planned for March go ahead and the taskgroup move to a finalized standard and/or Draft 3. Qualcomm may well rein in such claims and take a more realistic approach.

To date, Airgo, largely no doubt, smarting from being sidelined by Intel, has been highly critical of the over-egged claims of some of its rivals to support draft standards that are not finalized, and, as we have seen, has held back from supporting drafts in advance.

Now it seems to be placing itself in the firing line just as its new parentage will, once again, make it a target for the attacks of the WLan chip majors, Intel, Broadcom and Atheros. Airgo may well help Qualcomm join those ranks, or at least line up with TI on the integrated multi-radio front, but that will not be achieved by unrealistic claims, but by the usual Qualcomm route, genuinely strong technology, sharp marketing and acute politics.

Copyright © 2006, Faultline

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