Mannerisms

‘They haven’t chosen to renew their licence agreement”, replied the Qualcomm guy.

That’s up to them, of course, but it means, in theory, that Nokia can’t legally make 3G handsets because it was agreed that the Qualcomm CDMA standard would be the cellular 3G standard.

Maybe, I suggested, Nokia hadn’t renewed its licence because the terms Qualcomm required for renewal of the licence were not ‘fair, reasonable and non-discriminatory’ which Qualcomm had told international standards bodies would the be the basis on which it would licence its technology if CDMA was adopted as the 3G standard.

He didn’t suggest an answer to that one.

Then I suggested that requiring a license fee which is a fixed percentage of the cost of a handset, however expensive, is not fair.

He didn’t put forward an answer to that one.

Then I suggested that the rumoured Qualcomm license fee of between three to five per cent of the cost of a handset could hardly be regarded as reasonable.

He had no comment on that one.

Then I suggested that offering customers reduced licence fees if they bought Qualcomm chips was hardly non-discriminatory.

He did not feel obliged to respond to that one.

So what is Qualcomm trying to do? I asked him.

“We’re about enabling competition”, he replied.

Is that the same sort of competition as was enabled by Wintel, where a raft of PC makers made single digit profit margins, while Intel and Microsoft garnered over 80 per cent of the profits of the PC industry?

His response to that was to point out that Qualcomm enabled loads of Asian producers to come into the market to compete with the guys with big market shares like Nokia and Ericsson.

This could be seen as a noble endeavour to democratise and expand the handset manufacturing industry.

Or it could be seen as a route to Balkanising the handset manufacturing industry in such a way that a lot of small players, all dependent on Qualcomm technology, could be dominated, and squeezed for profit, just as Wintel dominated and squeezed the PC makers.

The Qualcomm guy inclined to the former interpretation.

But surely, I asked him, Qualcomm must realise that the entire worldwide electronics industry is going to do its damndest to stop another US attempt to establish the same dominance over an industry as Wintel wields over the PC industry.

He did not comment on that one.

So it looks as if the world’s largest maker of handsets is not, any time soon, going to be buying any chips from the world’s largest vendor of wireless chips.

It seems odd that the clever guys in Espoo, and the clever guys in San Diego, can’t agree on what is ‘fair, reasonable and non-discriminatory’.

But it is a certainty that lawyers can argue until the cows come home about the definition of such a waffly phrase.

So the stand-off could continue indefinitely.

However, the stand-off could be resolved if Qualcomm made it clear that it is not trying to establish another Wintel.

For Qualcomm that will be difficult to do, because Wall Street will undoubtedly be urging the company to maximise its revenue flows by maximising licence fees.

If Qualcomm puts it beyond all doubt that it is not trying to establish a Wintel-style empire, and will always charge ‘fair, reasonable and non-discriminatory’ licence fees, then Wall Street will no doubt punish Qualcomm’s share price.

A tricky dilemma for the San Diego guys.

Which makes this question important:

What is Qualcomm up to?