kech--Not at all. What Nokia wants is not reduced royalties but NO royalties whatsoever and NO competition for its own GSM based systems. The key to what Nokia wants is seen in its terminating the joint venture with Sanyo. The expected return on the investment was too low to satisfy management, so they dropped it.
Also, by creating uncertainty over royalty payments, Nokia can make its own inferior system more appealing on grounds that it is the de facto world standard.
One thing that worries me is that Apple faced a similar situation in regard to its Macintosh system competing against Windows. In the early days of the Macintosh, there was no question that its system was better in all respects than Windows, but Windows quickly became the world standard. Part of the reason that the Mac failed to be more widely accepted was the insistence that no other manufacturers would be licensed to produce a Macintosh. By the time they changed that strategy, it was already too late.
In essence, the Mac became a niche market because its price was higher than Windows compatible equipment with roughly the same performance capabilities. It still is higher priced, and its market share is now reduced to less than 10 percent of all PC's. This could be the future for QCOM, even though QCOM has always licensed its products to anyone interested in making them. The difference here is that Nokia and its allies really want to eliminate certain QCOM products or systems, and that is probably against the law.
To clarify my position on royalties, I think at this point there would be no benefit in reducing royalties. This could have been done earlier, but now, given all the legal maneuvering, it would be more sensible to hand in there, as Jacobs is doing, and say, "Fellahs, there's no chance that we will reduce royalties on the IP that you are using or will be using in the next five to ten years. You're welcome to market whatever you choose, but we will be watching for any infringements and will act accordingly."
Art |
