Wireless Industry Analyst

The denial of Presidential Veto as I had mentioned was quite expected. This is definitely not an extra-ordinary circumstance for the President to have exercised his power. The next natural question is the impact of the ban of QualComm, BroadCom and the others.

QualComm

1. Its business as usual in its offices. The engineers had their tasks cut out the day the ruling was made. They had to present a quick work-around which was acceptable to the customers. And if QualComm's engineering and legal teams are to be trusted, they must have done a fairly good job in packaging the solution in a manner that BroadCom can no longer litigate against.
2. The business model will be heavily challenged in the days to come. More litigations and counter-suits are on their way with Nokia lining up for the battles as well.
3. It will likely have a lesser negotiating power when it comes to the cross-licensing tables. So, my suspicion is that apart from part of the Verizon bill that it will likely foot, there will likely be a loss of revenue from its patent portfolio. So watch out for its patent portfolio growth and track the corresponding revenue from the IP and they will have a story to tell.

BroadCom

1. It has risen to the status of the industry Robin Hood and has perhaps led by example that the QualComm model can be broken if this onslaught can be sustained.
2. It has gained traction with the service provider community (with new friendship with Verizon and something similar perhaps on the cards with Sprint). This community was understood well only by QualComm for a long time and the San Diego company played its cards very well with them. The complete packages that were offered with QualComm products and the extra-mile it went to keep the carriers happy afforded the company its superior position in the industry. Perhaps, with this situation, that equation hs been slightly altered.
3. Converse to the QualComm case, BroadCom will have higher leverage at the cross-licensing tables that will help it obtain cheaper deals with QualComm for the 3G solutions out of its stables. This will reflect in higher profits if it succeeds in making its 3G chipset pervasive.

The others
1. Verizon and the carriers are in a win-win situation. Now, they have QualComm on its toes while there are other companies eager to get closer to them. The carriers can now demand better modems, more features and get better pricing. More suppliers, lesser price, better products - the common economic mantra works here.
2. Nokia and anyone other than QualComm are likely to take this as a precedent and step up the ante. Lets move aside to let street-smart lawyers rule the roost.
3. Phone manufacturers are likely to both benefit and suffer. They may not have any problem getting current phones in if Sprint also strikes a deal similar to Verizon's. But, in the future, unless this issue is resolved, they may have to go for non-QualComm chipsets knowing fully well that they may get a raw deal with costlier yet poorer performing and poorer serviced products. Of course, this assumes that the other chipset providers cannot product competitive wireless chips. But unless these companies can prove otherwise, that would be my instinctive guess. On the other hand, if QualComm works around this issue, then the same manufacturers can get cheaper chipsets from QualComm citing comparable prices from competitors. So they can eat into QualComm's profits further.

In summary, I don't believe that QualComm's business model is completely unharmed. The process is already underway and the other components of the wireless industry have positioned themselves to chip away from the company's profits. So though it may appear that the model remains intact, the impact is nonetheless likely to be felt.