Monday, November 21, 2005

As top dog, Qualcomm draws fire

The San Diego Union-Tribune writes a lengthy feature article on whether current king of the hill Qualcomm is an industry bully or has a big target on its back.

The company, which garners most of its revenue licensing technology and selling chips, is in the unique position of having rivals, who are also customers. The article outlines the myriad patent disputes facing the company both in the U.S. and Europe. Michael Cohen at Pacific American Securities said, "It's common for licensing and litigation to go hand in hand."

The article notes that "when the standard of WCDMA was created, it contained intellectual property developed by companies throughout the industry, including Qualcomm," which "required those companies to license their patented technology on "fair, reasonable and non-discriminatory" terms."

Michael King at Gartner Group said, "Other companies worry about, what if Qualcomm is able to exert the type of control it has had with CDMA in WCDMA. That's a pretty big fear."

Regarding the recent complaint by six companies – Broadcom, Ericsson, NEC, Nokia, Panasonic Mobile Communications and Texas Instruments – that asked the European Commission to investigate Qualcomm, King added Qualcomm "will be portrayed as the big American bully comes in and beats up these helpless European companies, like Nokia and Ericsson."

King said, "Bottom line, you're going to see both parties are right in some way. Qualcomm has very tightly controlled the narrowband CDMA market and, in doing so, has produced tremendous profit. People are looking at that and saying, 'I don't want to pay that much for wideband CDMA.'"