Expect Qualcomm and Nokia to remain miles apart

Qualcomm and Nokia remain miles apart when it comes to hammering out a new licensing deal for WCDMA technology, and given both of the company's stellar results in the fourth quarter, it doesn't appear progress will be made anytime soon.  

Qualcomm and Nokia have been in negotiations since before April [1], when the original 2001 licensing deal expired. Nokia wants to pay less. Qualcomm wants the same royalty rate it had been getting from Nokia the past six years.

But emerging markets have been the primary target market for Nokia [2]. Its strong fourth quarter was primarily attributed to its market dominance in key emerging markets such as China, India, the Middle East and Africa, where customers are buying cheap GSM devices. Nokia sold a record 133.5 million phones during the quarter and saw the strongest growth in the Middle East and Africa, where shipments were up 52.3 percent, while sales grew in APAC and China as well. Sales in North America and other mature markets, however, slid during the quarter.

Meanwhile, despite the Nokia overhang and its continued patent dispute with Broadcom, Qualcomm posted an 18-percent increase in quarterly profit and gave a positive outlook as the company is riding high on the demand for CDMA products. Samsung, a major Qualcomm licensee, has surpassed Motorola as the second-largest handset vendor. And struggling Motorola, which announced in September that it was going to remove Qualcomm from its 3G chip roadmap in favor of Freescale Semiconductor and Texas Instruments [3], has now run back to Qualcomm. Last week, Motorola announced it is broadening its relationship with Qualcomm by incorporating the company's chipsets in certain WCDMA handsets starting at the end of this year.

As long as both companies are thriving without a new deal, I don't see any incentive for either side to compromise. -Lynnette [4]