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Qualcomm versus Nokia

To understand the spat between Nokia and Qualcomm we need to understand the bigger picture, writes Puneet Mehrotra.

business Updated: Jun 14, 2006 13:03 IST

Power, money, technology, and talent they have it all. Both Nokia and Qualcomm are mega organizations. One is the world's biggest handset maker, the other the world's No 2 cell phone chip-maker and developer of wireless technology -- Code Division Multiple Access (CDMA).

Politics of power dominate this big and expanding world of telecommunication full of unleashed ambitions and desires. Welcome to the war of the Titans -- Nokia and Qualcomm are at it again. This time its Qualcomm hitting at Nokia.

Round Three - The Latest Bout

Qualcomm has lodged a complaint with the US International Trade Commission (ITC) against Nokia, alleging unfair trade practices. It complained about Nokia importing and selling certain mobile telephone handsets that use GSM/GPRS/EDGE networks along with a few other wireless communication devices and components.

In the complaint Qualcomm has accused Nokia of infringing six patents. This is the third attack at Nokia since November last year.

The response from the Nokia camp has been " the Qualcomm claim is without merit. Nokia is already licensed to use Qualcomm's CDMA technology under an agreement between the two companies from four years ago."

Qualcomm-Nokia - a strained relationship

Believe it or not Qualcomm and Nokia have a licensing agreement, which is valid till next year. Also true is the acrimonious history Nokia and Qualcomm have over technology licensing and patent infringement cases.

Qualcomm has filed several lawsuits against Nokia. On the other hand Nokia along with a few other companies complained last year to European regulators about Qualcomm's competitive practices.

In November, Qualcomm filed a suit in San Diego, accusing Nokia of infringing on 11 of its patents. Last month, Qualcomm filed a similar suit in the UK.

Intellectual Property Battleground - The Big Picture

Third Gen Telephony

To understand the spat between Nokia and Qualcomm we need to understand the bigger picture. The third generation standards for mobile telephony WCDMA (Wideband Code Division Multiple Access) and CDMA 2000 owe much to Qualcomm research. Lately the series of hits at Nokia is also being seen as directed at the GSM industry. The telephony technology market doesn't have geographical limitations any longer. Even a symbolic hit in the US can have repercussions far and wide.

In the new scheme of things the Intellectual Property is the new domain. A major revenue source is income from royalty and its only logical for Qualcomm to focus on the royalty base for which it needs a rock solid patent strategy.

The Qualcomm Message

Qualcomm has to spread its royalty base. A hit at Nokia kills two birds with one stone - a symbolic message to GSM industry especially in relevance to emerging economies and the other about its patent strategy. A hit at Nokia would also be an excellent pressure tactic in the ongoing patent negotiations.

There have been three consecutive hits by Qualcomm at Nokia. I guess it is Nokia's turn next. In the current market dynamics both of them are bound to cross paths. I guess Dwight David Eisenhower was right when he said "We are going to have peace even if we have to fight for it."

Puneet Mehrotra is a web strategist atwww.cyberzest.comand editswww.thebusinessedition.comyou can email him onpuneet@cyberzest.com