The Pandora's box

Wednesday, August 22, 2007

Aha..I said so! With BroadCom's victories over QualComm (QCOM), I surmised that Nokia (NOK) and the others will soon follow suit. It is not a difficult thing for some to see. And sure enough, the Pandora's box has been opened. Now Nokia wants to ban QualComm chips. And do they have a reason? Plenty. But perhaps the most important of all is their intent to break QualComm. They have several reasons for this -
  • As market leaders in the 3GPP space, they cannot handle QualComm as a chip-set supplier unless the latter's position is toned down. Nokia's getting out of the chip-set business means that QualComm is a potential supplier of 3G chips to them. From Nokia's perspective, they would want to reduce the cost of even the most competitive chip-sets to improve their margins. This would require reduction of QualComm's bargaining power and that comes implicitly by devaluing their IP position.
  • It will be sweet revenge for Nokia considering they were literally pushed out of the CDMA business not long ago. This is unlikely to be the determinant or root motivation for the ITC ban request or the slew of suits. I just want to illustrate the bad-blood that flows here.
  • Nokia will want to assert its position as a phone vendor as opposed to chip-set manufacturers to establish superiority in the industry and in the value chain.
Whether this ban request holds water is a different issue. What this signals again is that the opposition to QualComm has taken a more open form and its probably time for the company to shed its 'arrogant' tag for continued dominance in the industry.

Posted by Vijay Nagarajan at 8:51 AM  

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