Qualcomm Moves to Blunt WiMAX

The Qualcomm Purchase of Flarion Serves Notice that Qualcomm Intends to Win

August 15th, 2005

By - Timothy Sanders

Last week's announced purchase of Flarion by Qualcomm should be seriously noted by WiMAX players of all stripes. It serves clear notice that the entrenched business Qualcomm built won't go away anytime soon.

Qualcomm, which earns more than a billion dollars annually from patent licensing, fully intends to protect that business. Its acquisition of Flarion is clearly a move to do just that.

Flarion is, relatively speaking, an early stage company. It has not garnered big wins in terms of customer base yet and casual perusal of this transaction would indicate that doesn't make sense. However, clearly Qualcomm feels serious competitive pressure from the WiMAX world. And Flarion has product in the field. Mobile WiMAX is not quite there yet.

WiMAX, particularly in its Mobile or 802.16e version is a serious competitive threat to Qualcomm's CDMA2000 - EV-DO technology on the cellular side. This development is becoming more apparent every day. Some industry insiders have expressed their amazement at the potential penetration of WiMAX into the 3G cellular market. Make no mistake, Mobile WiMAX is the rage amongst WiMAX Forum™ members and for good reason. It really does appear to offer a viable option to Qualcomm's technology.

Qualcomm must protect this---thus the Flarion acquisition. Flarion's OFDM version called Flash OFDM is based on the basic technology of OFDM as is the Runcom version of OFDM called OFDMA™ . However both are proprietary iterations. The companies chose different technological development paths for its brand of OFDM. Both are geared to handle multiple users in a mobile environment. However they handle this task is somewhat different ways. The basic market difference being that the Runcom version of OFDMA is likely to be used in Mobile WiMAX (albeit the final standard is not set).

This gives Qualcomm a viable option for customers favoring an OFDM platform, a credible preemptive in the marketplace to show investors. Most importantly Qualcomm stakes out its ground as the primary WiMAX alternative. This appears crucial for Qualcomm. Does this move herald potentially more transactions of this nature? That is tough to say. Clearly Qualcomm does not intend to see a multi-billion dollar investment and income stream go away without a serious fight.

This means two things: One is that WiMAX is perceived as a serious threat to its dominance. And secondly that WiMAX is in for a real fight in the marketplace. And a credible OFDMA alternative just got voted a big YES by a major industry player.

The upshot is that this kind of competition is good for everyone. Customers win big with better products. Vendors win big in that they have a foil to sell and develop products against. It behooves the Forum and its members to launch Mobile WiMAX quickly and well.

Tim Sanders is founder of TheFinalMile, Inc., a fixed wireless consulting group. His experience came from running a multistate Wireless ISP. He can be reached at tim@thefinalmile.net  or 828-253-0702.