Nokia, QUALCOMM, & WCDMA
How do you reconcile Nokia 's global market share climbing to all-time record levels, their handset operating margins reaching their highest levels in over 3 years at 2x their closest competitor, their overall handset profitability reaching record levels, and Nokia continuing to be the global leader in UMTS (WCDMA) handset sales with their WCDMA handset share close to their overall record global share?
Hello Art,
<< Eric, as you know better than most, Nokia thrives on its old GSM technology and follows a policy of encouraging use of this old technology with minor updates, such as GPRS and EDGE. >>
What I really know is that Nokia today not only thrives on 3GPP's new and continuously evolving collaboratively developed GSM Phase 2+ technology BUT that it ALSO thrives on 3GPP's UMTS (WCDMA/HSPA) technology.
I also know that GSM Phase 2+ GPRS, with its IP backbone, and packet RAB's, was not a minor update to GSM Phase 2 networks designed for circuit-switched voice and data with ISDN connectivity. It was a major update and proved to be much more complex and took much longer than anticipated to be matured and implemented. That in turn delayed WCDMA implementation because for an incumbent GSM operator, or even a greenfields WCDMA operator like Hutchinson '3' GPRS operating in multiple GSM environments with nationwide coverage is a requisite bridge to WCDMA.
EDGE by contrast, while a significant update, was a comparatively minor software update to GPRS networks.
3GPP GERAN R'7 Enhanced EDGE which will double EDGE data transmission rates, and halve EDGE latency will also be a significant update.
<< The conflict between Nokia and Qualcomm is related to Nokia's need to sell WCDMA handsets (finally, after creating as much delay as possible in implementing WCDMA). >>
The conflict between Nokia and QUALCOMM is a conflict between two significantly different business models and from Nokia's perspective, QUALCOMM's blatant disrespect for the IPR of others.
Nokia simply does not share QUALCOMM's vision of QUALCOMM being the 'R&D Aggregator (and IPR aggregator) for the mobile wireless industry.' Neither do the other major contributors to the requirements setting, standards and technology development, and commercialization of UMTS (WCDMA/HSPA) including four of the five other parties that initiated the November 2005 complaint to EC DG-COMP that you refer to as "Nokia's allies" alledging aberrant behavior in QUALCOMM's licensing practices.
<< (finally, after creating as much delay as possible in implementing WCDMA) >>
I find that statement from an extremely intelligent and literate individual like yourself to be patently (pun intended) ridiculous.
A collaboratively developed complex technology based on an interoperability standard matures at its own pace despite the best efforts of all collaborators and contributors. In the WCDMA case seamless handover of circuit switched voice and circuit switched and packet data from and to GSM and WCDMA in multiple frequency bands was a strict operator requirement, and one that took more time to achieve than initially estimated. Nokia couldn't control that, Ericsson couldn't, Motorola couldn't, and QUALCOMM certainly couldn't, since they had nothing to do with GPRS development, and GPRS needed to be completely stable and upgraded on networks to the proper release level before WCDMA could be implemented in commercial volume scale. To compound matters this all occurred in the midst of a serious global telecomms recession and money crunch.
You have followed CDMA development since its very early stages. Same story. Presumably you don't have a short memory and can recall it vividly:cdmaOne matured and commercialized considerably slower than anticipated. The 1st attempt to bring up Hutchinson Hong Kong commercially in 1994 failed miserably. The network commercially finally launched 1 year later and it performed miserably
Sprint's partially owned Bethesda MD subsidiary, American Personal Communications (APC), planned to use its pioneer preference PCS license to launch this nations first all digital network in 1900 MHz PCS spctrum using CDMA technology. QUALCOMM and its infrastructure development partners kept postponing the delivery of pre-commercial infrastructure forcing the Schelles to switch technologies. In November 2005 the nations 1st all digital voice and data mobile wireless PCS network -- APC Sprint Spectrum -- launched in Baltimore/DC using GSM (PCS-1900) technology.
AirTouch, in QUALCOMM's back yard, told their investors that they planned to have their network commercial in 2005. They didn't. They claimed a commercial launch in May 2006 but by Q3 2006 end they had a few thousand activated subscribers, less than APC Sprint Spectrum activated in store and OTA in its 1st day of operation on its GSM network 10 months earlier.
Finally SKT, Samsung, LG, and QUALCOMM after working 24/7 for the better part of a year worked out the kinks and by the end of 1996 the 1 million CDMA subscriber milestone (98% in Korea) was achieved.
By early 1997 single band multi-mode AMPS to CDMA voice handover issues were resolved here on both coasts of the USA, but AMPS to CDMA migration in the Americas seemed to take forever.
The global 10 million CDMA subscriber milestone was achieved in Q2 1998, becoming 'commercially viable' by IMJ's evolved definition of commercial viability four years later than cdmaOne was originally projected by QUALCOMM to be commercially available.
Such is life in technology city.
<< Nokia cannot maintain its high GSM margins and record profits if it has to skim off royalties to pay QCOM for WCDMA. >>
That is a non-sequitor, and it doesn't compute.
Just as WCDMA IPR royalty revenue has become a significant portion of QTL's top and bottom line, and likewise with UMTS (WCDMA) chipset revenue and profit contribution to QTC, WCDMA revenue and margin has become a significant portion of Nokia's top and bottom lines.
Nokia has to "skim off royalties" from its industry leading WCDMA margins (not its industry leading GSM margins) on its industry leading global WCDMA handset sales, to pay QUALCOMM. They have been doing that for some time, and now they are accruing them and will continue to do that until rates and terms are settled. Its possible they are not accruing sufficiently, but for all intents and purposes what they report as operating margins is very close to what their margins actually are even with an estimated accrual.
<< QCOM need only defend itself intelligently (a questionable proposition, given their recent performances) and Nokia and its allies will collapse like a house of cards. >>
QUALCOMM needs to prosecute intelligently and effectively. They are the plaintiff in 11 separate actions initiated against Nokia in six countries on three continents. Nine of those actions involve submarine GSM (GSM/GPRS/EDGE) patents that they tardily declared to 3GPP via ETSI as essential to the GERAN standard, while the other two involve non-essential GSM implementation patents. It the nine actions involving alleged essential patents is very possible that in one or more of those actions that QUALCOMM will encounter a jurist that is as intolerant of patent ambushes as Judge Rudi Brewster.
QUALCOMM will, of course have to defend intelligently and effectively in four actions or counterclaims of non-essential implementation patents subsequently brought by Nokia.
<< Nokia's motive and its claims against QCOM are patently obvious, as are its so-called patents themselves. >>
You are certainly entitled to that opinion.
My own prsonal reciprocal opinion is that you significantly underestimate the breadth, depth, and quality, of Nokia's IPR portfolio across GSM, UMTS (WCDMA/HSPA and TDMA/CDMA), CDMA, and OFDMA. You also may have overlooked the sisu factor. In the face of 11 actions in which QUALCOMM is seeking injunctive relief for alleged infringement of GSM patents, Nokia has yet to blink in this negotiation by litigation game.
Best,
- Eric - |
