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Technology Stocks : The New QUALCOMM - Coming Into Buy Range -- Ignore unavailable to you. Want to Upgrade?

To: Art Bechhoefer who wrote (5985)	2/17/2010 6:44:46 PM
From: Maurice Winn	4 Recommendations Respond to of 9129

Art, we should belabour the point given the importance of royalties to being able to buy groceries years from now. Motorola and Nokia both got a 0% royalty deal. Motorola you will recall was not a minor merchant in the mobile phone business. They were King Kong. Nokia became King Kong. Even with 0%, it was a huge effort for CDMA to get going and Europe kept it out which meant economies of scale and global dominance went to the GSM Cartel with stupendous profits to Nokia as a result [and credit where it's due, they did do a good job with phones and coloured face plates before the lawyer took over the company and another fell out of a building and things went awry and CDMA finally got going in Europe and everywhere]. The point to belabour is that lower royalties have nothing whatsoever to do with subscribers choosing Qualcomm technology. All the whining like fleets of 747s was about intermediaries grabbing a bigger chunk of the pie if they could. Of course they claimed that "high" royalties were stifling market development. Bull Crap [to use the technical jargon]. As you will know from decades of ranting about Globalstar pricing, I'm all for introductory $0 pricing if the situation for that makes sense. I'm still at it as Globalstar prepares for their second constellation which should start launching this year. I am on the sidelines until I see what is their idea of pricing. I would advocate for 0% royalty if I thought that a good idea but it seems an extraordinarily bad idea, even on an introductory basis though it might have made sense in 1990 and 1991 to get the ball rolling. As the Koreans showed with GSM, even being outside the ring-fenced GSM Guild's price-fixing cartel, they were able to overcome 16% royalty rates and achieve significant market share. Now that they are on a more equal footing with CDMA2000 and W-CDMA [though Nokia and the evil-doing GSM cartel managed to stitch that up quite well too] they are doing a lot better. Nokia can hardly get a look-in to the USA where they have to compete with Samsung, LG, HTC and co on a more equal basis in the CDMA2000 market. They were Hell-bent on making W-CDMA dominant and as Lars Ramqvist said "Ve vill deny them their reqvest" [for CDMA2000]. It wasn't just the price of GSM ASICs which made GSM cheaper by way of economies of scale, it was also infrastructure and device costs in general. It was also very bad news for CDMA2000 that the USA bombed China's embassy and was stymied for years as a result [of that and other relationship issues]. That gave GSM a free run in China and might have led directly to the TD-SCDMA technology which is not yet dead. What was absurd was that even with the derisory royalties Qualcomm was charging, Neelie Kroes and Kroes Klutz Klan were out to get Qualcomm by arguing somehow, absurdly, that their royalties were UNFRANDly. On a patent counting basis they could probably claim that. The idea that royalties should be based on anything other than what the market will bear is NOT what we want. Royalties should NOT be based on share of the technology, what it cost to develop the patents, or how many patents are held. Royalties should be based on "Look, we hold these patents, which are rock solid and without buying the rights, you do not have a chance of making any money from the technology. Meanwhile, we will go ahead and make a huge fortune from CDMA which we own and there's nothing you can do about it. If you don't pay us 142% royalty for LTE, then you can just carry on using CDMA or switch to wifi or something else like carrier pigeons." It's about market power, not Geek speak and patent counting. The GSM Cartel played market and political power to the maximum. Now it's Qualcomm's turn - except that we missed the boat. Let's hope they don't give away mirasol for a song. Mqurice PS: Perhaps 142% is too cheap - having mobile cyberspace is going to be more important than having arms and legs.