Lucius,
Maybe this means QCOM sold their old infrastructure business but is free to develop new products.
Exactly.
I'm not 100% sure exactly what the word "infrastructure" means in this specific case, but I thought it included things like base stations.
Right again.
I don't pretend to understand the nuances and all the implications, but I'll explain how I think of it.
Let's assume you develop software that goes in a light bulb that requires special equipment in the lamp to work. But nobody is interested because everyone, especially your competitors, say it doesn't and won't work. So you get into the lamp-manufacturing business and the light bulb-manufacturing business to prove that it does work.
After a few years of selling the lamps and the light bulbs, the world begins to catch on and realize that your handy dandy software really does work. However, recognizing the limitations of your resources you now realize that a much larger company can do a better job of manufacturing and marketing the lamps. So you cut a deal with a major competitor who had been holding out on promoting your product. You sell the lamp business to that competitor, eliminating a competitor and picking up a new partner at the same time.
By selling the lamp business, you've got a huge company making more and more lamps. With every lamp they use a technology that they license from you. With every lamp they sell, the consumer also buys a few light bulbs. You are still making the light bulbs and you're also licensing the light bulb technology to other light bulb manufacturers, so you're making money on all the light bulbs and all the lamps.
Ahem, you're making money because you've got proprietary control over the really important stuff that makes the lamps and the light bulbs work. The light bulbs don't work without the lamps and the lamps don't work without the light bulbs. And you control the innerds to both.
In the mean time, you've got other competitors creating similar technologies that work. Those technologies are a little bit inferior in that they cause the light bulbs to flicker from time to time and because they burn out too soon.
Because those competitors are vying for a technological acceptance, you can't sit on your laurels. Your only chance to stay ahead of the game is to continue to develop new improvements and uses for your light bulbs and your lamps even though you are no longer making the lamps. Heck, some day you may decide not to make the light bulbs too. But you'll never, ever give up control of the innerds.
Fair analogy?
--Mike Buckley |
