"<< In fact Qcom's value chain is getting stronger by the day. Their growing earnings are evidence of that. >>
I was hoping you would back up your opinion with some fact that would make me rethink my view"
Eric,
I appreciate your thoughts. You clearly have significant expertise in wireless and wireless standards and follow the companies very closely. Furthermore, I read this board not only to try to understand more about the technology and the business outlook but also to try to see good arguments as to why my current investment in QCOM (long and somewhat diminished) might not be a good idea. So I read your thoughts carefully and try to see your point of view.
A few weeks ago, I challenged you or anyone else on the board to show evidence that QCOM had licensed its IP to be used in GSM/EDGE/WEDGE. As you know, the company is currently suing Nokia over this issue. I would think this would be fairly straightforward. Either QCOM licensed the IP for this standard or it did not. QCOM says the IP has not been licensed.
I think the company wouldn't have gone to the trouble of suing Nokia in Federal court, the ITC, and in England if Nokia could simply show the contract where this highly valued IP was licensed to them. I think it is clear that there is no such document.
Therefore, Nokia is using QCOM IP for GSM without a license. QCOM has stated that they simply wish to be paid their usual and customary FRAND rate for Nokia's use of their IP in GSM. Again, I don't see that QCOM has any obligation to accept a FRAND rate since they did not give anyone permission to use the IP for that standard. But the QCOM is trying to be nice.
Clearly QCOM deserves at least their usual FRAND rate on all units sold with their IP. That shouldn't be even contested. If they do get their usual (longstanding, widely published, widely contracted and accepted) rate on all EDGE/WEDGE units, what might that do to their value chain? As I have written here, I would argue against QCOM accepting a deal with Nokia that did not extract full FRAND royalties for the GSM uses of QCOM IP and for the full FRAND royalties (established by previous contract and widely accepted and negotiated licenses) on CDMA/WCDMA. If I had my way (and I realize that no one of any material consequence is reading this board), QCOM would derive a FRAND royalty for every unit sold which uses their IP. Actually, as I read that statement over, it doesn't sound the least bit unreasonable.
In other words, I don't really see a good reason the company should even "cut a deal." The law seems clear. Existing treaties require that IP not be stolen in international markets.
Anyway, have a good weekend. I appreciate your thoughts on these matters but await a clear argument as to why QCOM shouldn't deserve to be paid FRAND rates (or in the case of the GSM standard, greater than FRAND rates)on the use of their IP. I'm not trying to be obnoxious, I'm just trying to understand an argument why every other company in the world gets to charge a royalty for use of their IP, but QCOM doesn't.
Best wishes and with sincerity,
jay |
