Thursday, March 26, 2009

Dr. D helps take over Wind River

This morning at the (impossible to find) Wind River offices on Scranton, Marco Thompson hosted the “Android VIP Roundtable III” with four expert panelists on the Google-sponsored open source platform.

As part of hosting the event, Russ Christensen of Wind River put in a plug for the company’s hardware and software design activities for mobile — including Android-based devices. It struck me how much Dr. D has helped transform Wind River.

Once upon a time, Wind River was an embedded tools and OS (VxWorks ) licensing company that aspired to be the Microsoft of the embedded world. They spent a lot of time predicting such an outcome — I remember one Embedded Systems Conference where the pitch was particularly strong — but the industry for years remained badly fragmented.

Now the industry is consolidating around a common platform, but it’s not VxWorks. Instead, it’s Linux, which has many other suppliers beyond Wind River. And the common toolset for the embedded world is based on Eclipse.

So with the proprietary licensing business shot, Wind River has found a new niche around being a solutions provider. The pitch today on Christensen’s slides emphasized time to market.

This was always the Dr. Design story. Founded in 1984 by Marco (UCSD ’79), their speciality was to solve seemingly impossible problems in an insanely short period of time (and charge accordingly).

In 1999, Wind River paid $400+ million to acquire solutions provider Integrated Systems, Inc. In 1996, ISI had paid about $17.5 millionto buy Dr. D.

So what once might have looked like a less-scalable, lower margin complementary business to Wind River’s platform sale has now become an integral part to their new business model based on integrated solutions that integrate an arbitrary combination of hardware and software, off-the-shelf and custom components. This is exactly what Dr. D did for 12 years before Marco cashed out.

The results are not exactly as dramatic as the NeXT takeover of Apple that ushered in the Jobs II era, but in this era of commoditized software platforms, it’s still a happy outcome as Wind River seems to have made the transition to fight another day.

Wednesday, March 25, 2009

Cricket's big idea

Giant-Samsung-Messager-PhoneIn Philadephia, Cricket and Samsung are unveiling a 13' high replica of the Samsung Messenger.

The two companies earlier showed the giant phone in Chicago, as part of a publicity stunt for Cricket’s entry into the local market.

San Diego’s Leap Wireless (which owns the Cricket brand) has expanded to 35 of the top 50 markets with a POP of about 84 million — or about 27.5% of the potential US market. At the end of 2008, it had about 3.8 million subscribers.

Its younger roaming partner/low cost rival/spurned suitor Metro PCS is covering both unique and overlapping markets, with coverage in 92 of the top 100 markets. It ended 2008 with about 5.4 million subscribers.

Together, the two carriers have about 3.5% of (my estimate of) the 265 million US cellphone subscribers at the end of 2008, far behind the 28% of #1 Verizon Wireless (plus Alltel) or even the 12.4% of the smallest of the surviving national carriers, T-Mobile.

Photo from Chicago taken from

Tuesday, March 24, 2009

Nokia joins The Network

After largely giving up on CDMA in the Americas, on Monday Nokia introduced a stylish new flip phone, the Nokia Intrigue 7205.

The new phone is being offered exclusively on the largest US carrier, CDMA-based Verizon Wireless. It is the third CDMA phone here in the last year for Nokia, beginning with the 6205 and more recently the 2605.

It is unclear whether Nokia will have any impact on the LG and Samsung dominance of featurephone sales at Verizon stores across the country, but it is the logical next step after the patent settlement with Qualcomm.

Sunday, March 22, 2009

Broadcom misfires -- this time

When Broadcom filed suit against Qualcomm last October, it was the latest attempt by the Orange County low cost chip producer to force Qualcomm to change its business model.

Qualcomm announced last week that the suit was dismissed by the US District Court. However, if I were still a Qualcomm shareholder, I’d still be a little worried.

The suit was an opportunistic effort to use the SCOTUS decision in Quanta v. LG as a cudgel. As USD Law Prof. David McGowan analyzed the Broadcom complaint in this blog last November
The complaint alleges Qualcomm double-dips by charging handset manufacturers a royalty on both chipsets and handsets. Qualcomm may earn chipset royalties through sales to handset manufacturers or from licenses to competing chipset manufacturers such as Broadcom. It also charges a royalty directly on handsets.

Broadcom claims the Quanta case holds that a patentee may not charge downstream royalties beyond the first sale of its technology. This claim implies Qualcomm may either charge handset manufacturers a royalty for the handset or for a chipset (directly from Qualcomm or indirectly from Broadcom) but not both. Broadcom is asking the court to declare that it need not pay royalties to Qualcomm when Broadcom sells chipsets to handset manufacturers who pay Qualcomm royalties on handsets.
Even for a law professor (who are generally cautious about predicting court outcomes), McGowan saw the case as too close to call:
It is hard to say what is likely to happen. Quanta dealt with an unconditional license and Qualcomm has said its licenses are expressly conditional. The Court did not rule on such licenses. The district court therefore is not bound to rule for Broadcom. If one read the Supreme Court as sending the signal that patentees should only be able to engage in one transaction per product, though, one could extend Quanta to reach the result Broadcom seeks.
There isn’t much coverage of the ruling online, of which the Telephony Online explanation is the most incomplete:
US District Court Judge William Hayes, however, rejected Broadcom’s reasoning, ruling that Broadcom provided no specific of exhausted patents and that the purported damages Qualcomm has wrecked upon the industry were too speculative.
So I’m no law professor and in fact never went to law school, but the case was clearly dismissed on procedural grounds, not on a question of law; Broadcom’s legal claim was never tested. To me this suggests that the Broadcom case was rushed to court, without bothering to document specific patents and to find a putative victim. Obviously we don’t know what happens within Broadcom’s legal team, but this seems like the sort of weakness that a first year associate could have spotted before the case was filed.

I don’t know the specifics of the ruling, so it’s not clear whether the complaint was dismissed with prejudice, and if so, whether it prevents Broadcom from ever filing another patent exhaustion claim again. Even if so, one of Qualcomm other rivals might want to pick up the cudgel.

Telephony Online noted that Nokia filed a similar complaint that was thrown out (but that was pre-Quanta.) Nokia and Qualcomm now claim to be friends, so perhaps for now Nokia will train its legal guns on InterDigital rather than Qualcomm.

But Qualcomm’s business model and market share leave no shortage of enemies. If not Broadcom or Nokia, another possibility is TI — which was the world’s largest supplier of wireless communications chips until Qualcomm passed it last year. Finally, there are the Koreans, who never stop complaining about CDMA royalties and (like Broadcom) have been looking for any possibility to reduce the checks they send to San Diego.