Can Qualcomm maintain its iron grip on CDMA as the technology footprint gets bigger over the years? |
Qualcomm's CDMA hegemony revisited
Nextreaming Corp.'s recent vow to join a "global campaign" against Qualcomm Inc. stirs up memories of a somewhat odd relationship between Qualcomm and South Korea's wireless industry.
The developer of embedded multimedia software for mobile handsets recently filed a complaint with Korea's Fair Trade Commission against Qualcomm for allegedly violating antitrust regulations.
The move came on the heels of Nextreaming's apparent failure to sell its multimedia software to leading Korean CDMA phone makers like Samsung, LG and Pantech Curitel. Qualcomm bundles QTV applications programs with its cellular chipsets.
In the early 1990s, when the United States telecom industry was wary about CDMA as an expensive and complex technology, South Korea provided a testbed for Qualcomm to jumpstart its rollout. Korea was the world's first and only country where CDMA was an unrivaled winner.
Way back in 1991, the Korean government made a risky decision to adopt an unproven technology as the digital cellular standard. In retrospect, it cut both ways. Korea joined the league of advanced wireless markets and, subsequently, CDMA became its second most important strategic export market after memory chips.
But despite this huge confidence boost, Korea became a cellular walled garden with the ascent of GSM as the de facto standard for global mobile-phone communications. And over the years, Qualcomm's relationship with Korea's wireless industry has been frequently tested by the perceived imbalances in this deal.
Qualcomm is also walking a tightrope in the world's largest cellular market. After winning China Unicom—then the country's second largest cellular operator—to adopt CDMA technology, Qualcomm failed to make much headway in terms of economies of scale. It now faces an uphill battle to win support for its cdma2000 air interface against China's homegrown 3G standard.
Beyond Asia, Qualcomm is on the offense in Europe as well. Its disputes with European handset makers like Nokia over the use of CDMA patents have started to escalate. The firm recently filed a report on its licensing agreement with Nokia with the U.S. Securities and Exchange Commission.
Earlier, Broadcom, Ericsson, NEC, Nokia, Panasonic and Texas Instruments (TI) asked the European Commission to investigate and stop alleged anticompetitive conduct by Qualcomm in the licensing of essential patents for 3G cellular technology.
By Majeed Ahmad Qualcomm, though still in its awkward adolescence, is not new to royalty issues and patent disputes. Moreover, it has successfully thwarted competitive challenges from the likes of chipmakers LSI Logic and DSP Communications in the past. But as the wide-scale commercial realization of CDMA nears, stakes for Qualcomm and for new aspirants to the CDMA merchant silicon market are getting higher. TI has sampled baseband and RF chips for cdma2000 1xEV-DV technology, while STMicroelectronics (ST) has launched power management and related semiconductor technologies. So far, Qualcomm practically had the CDMA silicon market to itself. But it is a fabless company. ST and TI, on the other hand, have their own fabs and can drive down the costs using manufacturing economies of scale. After all, the price of CDMA silicon is almost twice that of a GSM chip. It would be interesting to see if Qualcomm is able to maintain its iron grip on CDMA as the technology footprint gets bigger over the years. If the recent history of Microsoft and its hegemony in PC software teaches any lesson, this won't be an easy ride for the San Diego-based wireless firm.
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