Wireless Industry Analyst

• Royalties may go down from 5% to 2% of the handset ASP. Or at least that is what the anti-QualComm wants.
  
• With Europe amounting for around 20% of the total handset market on an average, this in turn amounts to an estimated $4 billion in lost revenue ( at 90% operating margins) over the next five year

Two pieces of information over the past two days may spell some more bad news to QualComm. First came in the news that the European Union has decided to go with DVB-H patronized by Nokia. The EU wants to stick by it and maybe even make it a law to only use DVB-H for broadcast. This means that QualComm's MediaFlo is virtually out of Europe. Of course, this is not all bad since MediaFlo has gelled well with the U.S. carriers. With this news, also watch out for Sirf Technology Inc. which through the acquisition of TrueSpan has positioned itself to expand beyond the GPS market to get into the DVB-H market as well. Though their market cap is around $1.5 billion now, with GPS taking center-stage as one of the big features of tomorrow's mobiles and with DVB-H gaining traction, the company can go places, especially if it can ink some prudent GPS bundling agreements with cellular and/or WLAN chip-vendors. Another thought, as outrageous as it may seem, is that QualComm may make a bid for Sirf just for the synergy and the complementary technology that the latter can bring in. Of course, this would be at least around 3x bigger than the Flaarion acquisition.

Another piece that is most talked about today is the Sprint-Clearwire agreement to merge their WiMax networks. This is good for the WiMax proponents but is most likely a set-back for QualComm. A good possibility however is that Sprint sees this as a way to de-couple it's WiMax business (which is currently only a small proportion) and its more pervasive CDMA business. If this merged-unit is being treated as a new independent entity, then Sprint is implying a commitment to keeping alive and hence enhancing its CDMA2000 network with EV-DO and other capabilities along the 3GPP2 evolution path.