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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: JRH who wrote (2213)5/25/1999 9:41:00 PM
From: Mike Buckley  Read Replies (2) of 54805
 
Justin,

I understand your reason for concern but I don't believe the Apple situation is analogous to Qualcomm's situation. To the degree that
Apple chose not to license their OS to other hardware manufacturers, they kept their proprietary architecture closed. In so doing, they became a classic example in Gorilla Game history of the inherent weaknesses of a proprietary, closed architecture.

Contrast that with Qualcomm who is licensing their proprietary technology to anyone who wants to pony up. They are keeping it proprietary but open, not closed. And they are constantly making improvements that affect the infrastructure and end-user part of the business. Those improvements will help total product adoption accelerate.

The Q's absence from the UMTS negotiations appears to me to be a scenario in which the "have-nots" are attempting to outnumber the "haves" by a magnitude of 40 to 1. Because Qualcomm has the technology and the control to dictate licensing terms, the "have-nots" are hoping to negotiate those terms for the Q.

If you're familiar with the Citrix/Microsoft story you know that the customers widely complained about the cost and licensing structure of Softie's Terminal Server. That in turn had adverse affect on the adoption of Citrix's product. Softie responded to the customers in a meaningful way that helps both the seller and the buyer of the product. But they didn't let the customers form a committee to determine how royalties would be determined and assessed, as the UMTS appears to be attempting to do.

In essence, the "have-nots" would prefer to turn Qualcomm's proprietary control over to a standards committee because it would weaken Qualcomm. In this case, the committee is striving to determine a standard of pooling of licenses. It's not the same as determining a technological standard, but it's not far from it in its far-reaching effect. To the extent that Qualcomm resists this, they maintain proprietary control. And to the extent they maintain proprietary control I disagree with Geoff Moore that they have lost it.

Make sense? Other opinions welcome.

--Mike Buckley
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