Cheap Phones Hit Qualcomm Royalties In India

[KumaarShah 143]

Cheap phones hit Qualcomm royalties in India

TIMES NEWS NETWORK [sATURDAY, JUNE 24, 2006 03:59:16 AM]

MUMBAI: India contributes about 2.2% to the total revenues earned by Qualcomm from royalties globally. Of the total world-wide sale of handsets, about 8% in volume terms are sold in India, according to the company officials. However, they did not elaborate on comparable contributions by other countries like China and Korea.

“About 2.2% of handset royalties came from India last year, even though the country accounted for approximately 8% of the royalty-bearing units reported to us by our licensees,” said Mike Hartogs, V-P and Division Counsel, Qualcomm Technology Licensing, answering an ET query.

“Royalties out of India are lower than the Indian share of handset shipments which further indicate that the royalties on handsets in India are the lowest in the world.”

Qualcomm officials refused to disclose exact royalty rates, citing confidentiality clauses, but said the lowest royalty can be attributed to the cheapest handset prices.

“The royalty on handsets paid in India is 15% lower than the corresponding figure in China,” said Mr Hartogs. The Qualcomm officials were speaking at a Web cast organised in San Diego, USA, on Thursday. Qualcomm is the patent holder for the CDMA technology and has come under fire for charging higher royalties in India compared to other countries lately.

Elaborating on the proposed reduction in royalties, Qualcomm officials said as it’s a low percentage in single digit, it works out to a negligible amount in absolute dollar terms on a $40 phone — about $2 if one considers royalty in the region of 4-5%.

“It is hardly a significant driver of price reduction,” said Mr Hartogs. Besides, he said, two-thirds of the CDMA handsets sold in India were sub-$50 handsets and about 98% below $75.

Kanwalinder Singh, president, Qualcomm India and Saarc, reiterated the company’s commitment to competition by working with their partners and the ecosystem continually to drive wholesale pricing down. Qualcomm officials maintained that the royalty rates had not changed over the past several years.

“Qualcomm has not increased its standard royalty rate while its patent portfolio has grown substantially. The licensing model of Qualcomm reduces royalty stacking,” added Mr Hartogs.

Citing a study by the Yankee group, a company official said there was a $4 difference between the GSM and CDMA handset prices for the low-end category, that is sub-$50 handsets. There is a $38 differential in the average selling price of a GSM phone compared to its CDMA counterpart. Qualcomm also raised the issue of royalties in the GSM space which they claimed was in the range of 3-29%.

Link Courtesy: http://economictimes.indiatimes.com/articleshow/1675249.cms

[@ksh@T 20]

theese fools will come to straight road by kicking their asses

[Utsav 0]

Does it mean that we shouldn't expect CDMA handsets' price go even lower in India?

[kshah 452]

Good strategy ADA.

[Utsav 0]

Q'Comm has been gathering money for over the years for their silicon flakes... they should start looking at something new now!

[linuxguy 0]

Haha...great one @ksh@T! Qualacomm is stifling the growth in the CDMA sector. Why and how? Well the why is simple - Money. How? Well since their handsets are operator specific, people cannot sell their handsets like in the GSM markets. The onus of marketing, distribution, programming, testing, virtually everything lies on the operator. That saves their costs which means big $$$ wins for Qualacomm. Next people cant sell their handsets to people of other operators either! So people will simply buy new ones . People can't complain about their quality, usability, features either! Plus licensing, royalties etc... are added income to Qualacomm.

Anti-trust law suit against Qualacomm!!! We NEED Open Hardware which will KICK Qualacomm's a$$. We need LINUX's equivalent for the HARDWARE sector! It is only then Qualcomm will come to its senses!

[Arun 795]

Qualcomm may agree to chipset price cut for India

Press Trust of India / New Delhi July 13, 2006

CDMA technology inventor Qualcomm is likely take up the issue of chipset price reduction for the Indian market at its forthcoming board meeting on July 19, which may result in a reduction in prices of handsets.

The CDMA technology licensor's market capitalisation has taken a knock-down of $15 billion, owing to several reasons like Nokia's pull-out of CDMA-based handset market and Reliance Communications' planned expansion into GSM-based mobile services.

During his visit here, Qulacomm CEO Paul Jacobs is believed to have favoured the chipset reduction model over the royalty cut, which he said has no scope for further reduction as being already low. But he had not committed any time-frame for this.

Indian CDMA operators have suggested Qualcomm bring down the chipset cost at par with GSM chipset cost. In low-end handsets (about $40), the CDMA chipset costs $10 while the GSM chipset costs $5. The $5 difference translates into a 12% rise in handset costs. The $10 chipset cost is 25% of the overall handset cost.

Operators are believed to have asked Qualcomm to reduce the chipset prices immediately rather than doing it over a period of time of 3 years.

[Arun 795]

Qualcomm board likely to set up a fire-fighting panel

DNA Networks

Monday, July 17, 2006 22:02 IST

KOLKATA: The board of Qualcomm, which is slated to meet on July 19, is likely to appoint a committee to initiate conflict resolution between Indian CDMA operators and the San Diego-based technology provider on such issues such as royalties and chipset costs.

According to industry sources, a team of senior Qualcomm executives of based in the US has been in constant touch with both Reliance Communication Ventures and Tata Teleservices to sort out the royalty issue.

“Indicative appointments with Reliance and Tatas have been sought and members of the Qualcomm board-appointed committee may come to India before the next board meeting of Reliance, which could finalise the company’s future GSM expansion plans,” a source said.

An official with a CDMA operator said the key issue is economic parity between GSM and CDMA in terms of network costs and price of handsets.

The Indian government, he said, is concerned over the high royalty and chipset tab, that are increasing costs of rural telephony projects by about Rs 400 crore.

“To a great extent, the future of CDMA revolves around the market share it manages to capture in India. With the largest and most aggressive operator, Reliance Communication, tilting towards GSM for future expansion, the Qualcomm board will have to take a relook at its Indian strategy at its forthcoming board meeting,” an official of a GSM operator told DNA Money.

GSM ‘only’ for USO — another blow ahead?

Just ahead of Qualcomm’s forthcoming board meeting on July 19, the San Diego-based CDMA technology owner has received another jolt in India.

The Department of Telecom is learnt to have made a proposal to the effect that only GSM mobile telephony, and not all cellular operators, be made eligible for the benefits of the Universal Service Obligation (USO) for offering services in rural areas. If the proposal is approved, CDMA operators would not be able to access USO Fund.

Only basic or fixed-line service providers were eligible for the USO Fund earlier. A Bill was tabled in the Budget session of Parliament to include cellular operators, too, for the USO Fund benefits. Currently, the Bill is before a parliamentary standing committee.

The eligibility of GSM could potentially put another squeeze on Qualcomm’s marketshare in India.

[Arun 795]

Qualcomm not to negotiate royalties with Reliance

New Delhi, July 26, 2006

Press Trust of India

CDMA technology developer Qualcomm on Tuesday, said it was not negotiating with Indian telecom players, including the Anil Ambani group company Reliance Communications, on lowering the royalty paid by them.

"Qualcomm is committed to help the industry drive handset prices down and it involves multiple players and has nothing to do with negotiations on royalties with operators as they do not pay it," the company said clarifying media reports.

The statement comes amid reports that Reliance Communications was putting pressure on Qualcomm for lowering the royalty on the ground that the US company was charging much higher rates from operators in India as compared to China.

India has the lowest device prices in the world and royalties on the devices sold in India are the lowest in the world, the company said, adding "Qualcomm is working aggressively to enable even lower-cost devices."

The average royalties paid on devices sold in India over the past 12 months have averaged 15 per cent lower than royalties that have been paid on devices sold in China and are far lower that royalties that have been paid to Qualcomm in markets like Korea, Japan and the US, it said.

[Arun 795]

Royalities killing CDMA?

- MoneyControl.com

2006-08-30 20:45

1.7 million new subscribers in July, yet questions are being raised on the future of CDMA technology in India specially since Reliance Communications dialled GSM.

And these concerns have prompted James Person, the COO of the Global CDMA industry body CDG to pay India a visit. Person believes royalty rates is a commercial issue between operators and Qualcomm and the CDG doesn't have a role to play. However, he doesn't expect the existing royalty rates to spoil the CDMA growth story in India.

"We haven't seen it impact growth yet with the record number of CDMA users added in July. We are pleased with its growth; it is growing as fast as the overall telecom market," said James S Person, COO, CDG.

Person is believed to have met top Reliance and Tata Tele officials in Mumbai on Tuesday.

"When we talked to Reliance and Tata, we tried to make sure they understand what is the CDMA roadmap. That's smooth migration path from EVDO to Rev A, Rev B and Rev C and then onto 4G. They have access to our programmes that will reduce cost of handsets and then of course, they can make their decisions," he added.

Person believes that the price differential between GSM and CDMA entry level handsets is only about USD 4. But that's far from the USD 10 figure quoted by operators like Qualcomm chief Paul Jacobs. Person also believes CDMA operators like Reliance are toying with the idea of a technology switch only because of the government's spectrum allocation criteria.