This raises questions I don't know the answer to-
You probably already realize that Q's royalties on ASICs are next to nothing. The royalty profits come primarily from the sale of handsets incorporating any type of CDMA.
How many GSM handsets does Q manufacture?
Since it is the practice for handset sellers to pay the royalties, why should it be a big deal for Q not to pay small GSM royalties to Nokia? Nokia loses next to nothing and promotes a portion of the market it would like to see promoted in the process.
Nokia did not give up much by agreeing to a royalty-free license for its GSM IPR. Nokia's right to GSM royalties was merely a speed bump for Q since it recognized that Q will be the leader in multi-mode chips, a slice of the market Nokia naturally wants to develop.
Such a tempest in a teapot.
And if not, then why is the royalty free TXN (a non-vertically integrated chipmaker) deal, where the royalty is collected only at the handset level from the handset maker, considered so unique?
Because the deal involved a cross-license for TXN's IPR, too. TXN is the acknolwedged leader in DSPs, for which Q has a tremendous need. Remember that Q collects relativedly small royalties from the ASICs manufacturers, such as TXN. However, though small, the royalties are critical to TXN's cost structure. It gets the royalty-free edge in exchange for letting Q use its DSP IPRs. A win-win deal.
Nokia is not a licensed ASIC seller and neither is STM. They will have to get licenses to sell the chips--shouldn't be a problem. The money is not huge but the effect of growing the market is. As far as TXN is concerned, I suppose it depends on how the the alliance is structured. TXN's license cannot be transferred, so if this is a transfer, the royalty-free deal must be re-negotiated. No big deal. |
