Qualcomm and Broadcom

First of all, sorry for the hiatus.  This unemployment and rehab thing is exhausting, physically and emotionally.  It’s time to get back into the saddle.  And what better day than today?

Qualcomm and Broadcom announced a settlement of their longstanding and broad-based legal battles.  For many of you, these two are perhaps familiar names at best, more likely evoking questions of “what is it exactly they do?”  However, when you realize that they’re effectively the Intel and AMD of the mobility space, it gives their settlement a new perspective.  Make no mistake about it, both have significant ambitions in an increasingly mobile computing platform, and world.

The two have spent considerable energies, monies and court time in fighting each other.  The net result of all this fighting was ultimately some degree of customer uncertainty.  Not customers as in end-users, who are largely unaware of the role these two play, but instead in the minds of handset and other device manufacturers who were often caught up in this maelstrom.  Now that this longstanding battle is behind them, Qualcomm and Broadcom can now devote increasing focus and attention to emerging market opportunities, which are considerable.

Many will focus on this as a Broadcom “win,” and any settlement where you get paid almost a billion dollars is pretty much a win, but I believe Qualcomm is really the big winner here.  Yes, a billion’s a lot of money but Qualcomm’s licensing business model is really a license to print money.  They can afford it.  Heck, the savings in litigation expenses alone is probably almost a wash.  While this doesn’t mean Qualcomm’s legal staff is now sitting around like the Maytag repairman, there’s a real savings here.  More importantly, Qualcomm management can now focus on market opportunities instead of legal strategies.  That can only sharpen their market focus.  Lastly, and most importantly, Qualcomm is now largely unencumbered in its efforts to pursue new opportunities, drive new licensing opportunities and pursue new relationships.  Qualcomm’s toxicity has largely been removed and real barriers to growth have been shed.

That’s an outcome well worth the billion dollars they’ll pay.


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