Obviously Nokia wants to permanently reduce its royalty payments to Qualcomm — and perhaps pick up ammunition for its ongoing fight with InterDigital. And Qualcomm is most concerned with not setting a precedent that will lower payments by other parties and destroy its business model. I’m not sure what’s taking so long, but perhaps they’re negotiating patent-by-patent. (Not clear how many that is — 2½ years ago, they bragged about 1,266 issued patents but the chart is now woefully out of date).
Who’s held hostage? Nokia can’t legally ship its W-CDMA phones to the U.S. without Qualcomm patents, but OTOH Nokia’s attempt to break Qualcomm’s business model has certainly put it in peril.
Sony Ericsson, Nokia’s major ally, was quoted at a Reuters conference last week as saying the negotiation is a really big deal.
“My thinking is that it is going to have quite a big impact on the industry as a whole,” Sony Ericsson’s head Miles Flint said at the Reuters Global Technology, Media and Telecoms Summit in Paris on Wednesday [May 16].Wow. That’s deep.
“If it was just a row between those two I think they might have settled it earlier. It goes quite deep,” Flint said, but noted it was difficult to estimate the exact ways it would impact the sector.
Despite the lull in public posturing, not all is sweetness and light. TelecomTV quotes some harsh remarks from Nokia’s CEO:
Nokia’s CEO, Olli-Pekka Kallasvuo, upped the ante yet again last week when, speaking at the annual general meeting of shareholders [May 3] in the Finnish mobile handset and telecoms equipment manufacturing company, he said that to do so would be tantamount to handing to Qualcomm “dictatorial reign over the entire wireless industry.”The comments seem newsworthy, so that no one else carried these remarks suggests that Nokia intended them only for domestic consumption.
Mr. Kallasvuo added, “Talks are ongoing, the situation is open, but I have to say agreement cannot be reached before both parties are in accord. It's completely clear that we cannot give one company, in this case Qualcomm, a chance to dictate rules for the whole industry. The issue is not Qualcomm versus Nokia, it's more about Qualcomm versus the rest of the industry.”
Meanwhile, Qualcomm’s #2 cheerleader is sanguine. In a Fool-ish commentary, Dave Mock wrote Wednesday:
The only real threats to the continued stream of cash flowing in to fund these perks are lawsuits and antitrust complaints pushed by Nokia and Broadcom. Nokia, in particular, is attempting to break the royalty dynasty that Qualcomm has enjoyed for 15 years by refusing to license next-generation technologies on terms similar to its original patent license agreement. Nokia is hoping that it and other equipment manufacturers such as Ericsson and Texas Instruments will be largely relieved of paying royalties to Qualcomm going forward.I would think shareholders would be more pleased to hear that Qualcomm is not only spending money on lawyers, but also a €100 million for European venture investments to align small companies to its business — much as Intel Capital invests to grow its market and to keep startups loyal to it rather than rival AMD. $134 million might seem a lot to you or me, but it is only about 20% (or less) of the Qualcomm Ventures funding.
But with the $200 million that Qualcomm intends to spend on legal defense this year, the company is going to great lengths to ensure that it can keep giving back to shareholders.
Its first investment, in French startup Streamezzo, seems intended to support its MediaFLO mobile TV service. Streamezzo makes content authoring tools for the Nokia-backed DVB-H, but presumably MediaFLO tools will now be forthcoming.