Can Qualcomm and Nokia Patch Up Their Differences?

Tag : nokia cdma mobile


New Possibilities
Jacobs hopes Nokia will license Qualcomm's Snapdragon processor,designed especially for superfast mobile multimedia devices, andGobi, a chip that provides wireless connectivity for notebooks."All these things are possibilities for us," Jacobs says. "It'sgoing from a very large part of the market that was essentiallyclosed to us to one that's opened up."
Another way Nokia and Qualcomm could work together, Jacobs says, isin mobile TV. Qualcomm hopes to clinch an arrangement where Nokiaphones come with built-in antennas that catch mobile TV broadcastsmade available to AT&T (NYSE: T) and Verizon Wireless subscribers via Qualcomm's MediaFlo network . Nokia also could license and promote Firethorn, Qualcomm's mobilepayment service for phones that is slowly gaining traction. "There's a lot ofopportunity," Jacobs says.
Qualcomm owns the patents on so-called CDMA (code division multipleaccess) used by 451 million cell phone users around the world,including those who've signed up with Sprint Nextel (NYSE: S) and Verizon Wireless, owned by Verizon Communications and Vodafone (NYSE: VOD) . New purchases of CDMA chips by Nokia could result in substantialsales gains for Qualcomm.
Will Strauss, president of chip consultancy Forward Concepts , expects global shipments of CDMA chips to accelerate in 2009,when the first Nokia phones based on Qualcomm chips could hit themarket. Qualcomm gets an extra 1 percent to 2 percent per-shareearnings boost from every 5 million CDMA chipsets it sells, UBSanalyst Maynard Um wrote in a recent report. A United Front
Nokia also stands to benefit from rapprochement with Qualcomm.Nokia is the world's largest cell phone maker, with 40 percent ofthe global market, but it's an also-ran in the U.S., where itcommands a mere 15.7 percent share. Disputes with Qualcomm havecontributed to Nokia's inability to make further inroads in NorthAmerica. Now that Nokia can buy Qualcomm chips unhindered by legaldisputes, it may be able to better compete with companies including Samsung , LG and Motorola (NYSE: MOT) .
By working together instead of against one another, Qualcomm andNokia could create more of a united front against rivals that posea common threat, including Research In Motion (Nasdaq: RIMM) , maker of the BlackBerry, and Apple (Nasdaq: AAPL) , which entered the mobile phone arena last year with its iPhone."There was enough infighting in the wireless industry that wasdistracting to a lot of people," Jacobs says. Instead, an end tothe bickering may help end the distractions, and kindlecooperation.
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