Apple, HP, Microsoft and Intel await Important IEEE Vote this Saturday on the Future of Wireless Technology Licensing Fees
Qualcomm, the world’s largest maker of mobile-phone chips, earns more than 60 percent of its profits from businesses licensing its patented wireless technology, collecting $30.5 billion in licensing fees over the past five years. The Institute of Electrical and Electronics Engineers (IEEE), a professional association that is the world's largest association of technical professionals, is holding a crucial vote this cominng Saturday that could put a huge dent in Qualcomm's profits stream if they vote for lowering licensing fees related to a range of wireless technologies. Such a move would greatly benefit Apple, Intel, Microsoft, HP and others. Qualcomm sees the vote as nothing more than a political move to weaken their market position.
According to a new Bloomberg report, Qualcomm's revenue stream would slow if the Institute of Electrical and Electronics Engineers adopts a proposal backed by Intel, Microsoft Corp., and device makers like Apple to prevent what they say are excessive fees charged for licensing technology in Wi-Fi standards now essential to connect computers, phones and tablets to the Internet.
The measure would limit patent owners from getting courts to block product sales of companies using the technology without paying, which Qualcomm says would lead to lower fees.
Fabian Gonell, chief lawyer of Qualcomm's licensing business didn't mince his words. He stated that "It's more an attack on Qualcomm's business model and licensing model. If Intel could reduce our licensing business, it would reduce our competitive advantage." Yes, this fight could get very nasty, very quickly.
Technology companies are divided over the issue. Wireless patent owners want compensation for their research costs. On the other side are device makers that don't want to pay a lot to integrate standards into the growing number of mobile devices, home appliances and automobiles.
Konstantinos Karachalios, the IEEE Standards Association's general manager emphatically stated that "This is a decisive battle. It's not only about money. It's about control of technology."
Yet Intel, Microsoft, Apple Inc., Hewlett-Packard Co. and Broadcom Corp. say that the fight is really about fairness and eliminating misuse of the standard-setting process. They point to investigations by competition regulators around the world into complaints that owners of standards patents -- including Qualcomm and Samsung Electronics Co. -- demand unfairly high licensing fees. For more on this interesting developing story, see Bloomberg's full report.