This week's post is about an article on gigaom.com, that addresses Qualcomm's purchase of HP's patent portfolio, which includes both issued and pending patents. The benefit for HP was that their $1.2 billion purchase of Palm was somewhat justified by Qualcomm's purchase of relevant patents. For Qualcomm, the newly acquired patent portfolio is an opportunity to assert themselves in the world of mobile devices, which calls into question whether Qualcomm will use HP's patents to attack other companies.
The way I see it, Qualcomm made the right move, whether they plan to use HP's patents offensively or not. By possessing the patent portfolio, Qualcomm has a better defensive position. Also, considering that every patent is an intellectual monopoly, Qualcomm is in a better position.
http://gigaom.com/2014/01/23/qualcomm-buys-major-mobile-patent-portfolio-including-palm-patents/
https://www.youtube.com/watch?v=pr5hJFA81bs
Good article! Not many people know that Qualcomm is a big player in smartphone industry. I can see that they are also beefing up their patent profolio. It's bold move, and will benefit them in the future. Do you know what types of patents they are(wireless, phone, or etc)?
ReplyDeleteQualcomm acquired 2400 patents from HP, including those pending approval.
DeleteCurrently, about 2/3 of Qualcomm's profits come from wireless technology licensing, so that's further context about Qualcomm's interest in increasing its patent holdings. On the other hand, HP's profit from selling the patents will allow them to invest in more R & D to compete with companies like Intel.
I am not sure if it was best for a company like Qualcomm to obtain these patents but it may have at least prevented a bidding war on them. However, I do agree that it is a tactical move on Qualcomm's part but this event illustrates something on a larger level-the cyclic life of the tech businesses.
DeleteAt some point, companies like HP may have not made the best decisions and end up disappearing from the market and allow companies like Qualcomm to surge and take a large position. These patents can be seen as a by-product of this business cycle where old groups die off and are replaced by newer companies but is this cycle justified? It does seem to bring some degree of innovation which benefits the consumers of these products yet it still emphasizes the intense competition of at least the technology space. Some of the cases between these companies seem to show that it feels like the observer is watching two wild lions fighting each other in a cage. I do know that Qualcomm's technology is being implemented in a lot of the new products like tablets and smartphone and it unfortunately does feel like they are fighting simply to stay alive as a company.
Qualcomm is a big player in smartphone technology, and it would be best for them to purchase patents like this to stay in the game. Especially, since there are other companies coming to haunt them right in the tail. I feel like HP was out of the game because their technology wasn't on par with others. As seen, they are switching gears and trying to go into cloud and enterprises. Qualcomm is solid in terms of mobile technology, and I can only see this as a move to beef up their patent portfolio. Remember, Qualcomm used to be really tiny company comparatively ten years ago. Now, it's a big player in smartphone business.
Delete"It's a little-known fact that Qualcomm makes more of its money from licensing out its technology than from the chips it sells, although the intellectual property can also help it negotiate chip deals."
ReplyDeleteQualcomm is in the business of telecommunications equipment and semiconductors, and it's unlikely that they will use these patents to produce a cellphone of its own. I would definitely agree with you that Qualcomm is more focusing on the numbers of patents. They are simply building up their patent portfolios. One is for defense, one is more extracting more licensing fees from companies.
I touched on this in a previous post, but I think patents are becoming the next big commodity. Historically, we've placed tremendous value on land, gold, natural gas, and other resources with major global influence. Now that we've industrialized and entered an age of technology, with a growth in urban life and service jobs, I see more value being put on intelligence. At this point, it's only natural for intellectual property to become more and more inflated. Today, patent wars are being waged all over the world by corporations like Qualcomm, Google, Samsung, and more. Each of them wants to dominate the others by holding as many intellectual monopolies as possible. I agree with your comment that these companies are simply building patent portfolios, and I think their actions are akin to an intentional arms race.
DeleteWhat keeps us from labeling Qualcomm as a patent troll then? If it seems like they are buying patents to prevent competitors from having them, or to prevent bidding wars on them, exactly like a "patent troll" would.
DeleteThough, especially with a company like Palm, a pioneer in their space, I think Qualcomm has bigger plans for these patents. Yes, they make chips and internal gadgetry for phones, but they can now branch out and begin producing the technologies that were previously protected by the patents Palm had.
Firstly, I wonder why HP had thought of buying Palm in the first place. To be frank, I had almost forgotten about the company! Secondly, I agree. It seems that many companies are concerned with defending themselves in the courts, are the more patents they have, the less likely that there will be loopholes. When the time comes, I will only feel sorry for those employees who have to scour through all the paperwork to find out whether or not there is truly a violation.
ReplyDeleteI felt the same way when I first read the article. I'd forgotten about Palm, and in the fast-moving culture of the mobile device industry, it was frankly pretty ancient. However, I think that might be the reason that Palm was a smart buy; it's a company with rich history in terms of technology and business, and has a correspondingly impressive patent portfolio, so my guess is that it was somewhat undervalued at the time.
DeleteI was also wondering why HP is shopping up such a large portfolio of patents, but found a nice summary from Fortune Tech Magazine and wanted to share it here: "For all of its successes in the growing mobile device business, about two-thirds of the company's profits actually come from its wireless technology licensing business. Qualcomm collects royalties on nearly every modern smartphone sold on the market today. The addition of HP's patents strengthens that business even more, giving it additional income to reinvest in new businesses and keep ahead of rival Intel."
ReplyDeleteThanks for sharing! I think there's a tendency to be unfairly suspicious of companies that amass patents, since that's how patent trolls work. However, I think it's a perfectly legitimate practice to collect royalties on high-quality patent portfolios in order to generate income for additional business and innovation.
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