Qualcomm's buy of Flarion Technologies has implications for several wireless technologies.
First, let's look at the wireless space. Roughly these are the leading long-range wireless technologies with mobility: 2 in traditional cellular, 2 in broadband wireless access (BWA):
- GSM, with upgrade to GPRS and W-CDMA as 3G version
- CDMA, with upgrade to 1x-RTT and CDMA2000 (EV-DO and EV-DV) as 3G technology
- the 802.16e WiMAX version
- non-standard BWA technologies, such as Flash-OFDM (Flarion) and UMTS TDD (IPWireless)
This could be how the Flarion deal changes the wireless world:
- Flash-OFDM is a direct competitor to WiMAX. It has the advantage of being ready for shipping, whereas 802.16e will only hit the market in 2007 presumably. WiMAX of course has the advantage of being standards-based, ensuring product interoperability. This is valuable to carriers as it makes them not dependent on a single vendor. On the other hand, carriers may not mind the non-standards status of Flarion, now that it is to be part of a $66 bn company. Flash-OFDM therefore could be interesting to wireless carriers who are particularly afraid of mobile WiMAX. This could lead to a hybrid technology (cellular/Flash-OFDM). At the same time, Qualcomm takes out a potential competitor to its current technologies.
- Qualcomm could use the technology to benefit its Media-FLO network for broadcast services to cellular phones, because this also uses OFDM.
- Who knows Flash-OFDM could become the de facto 4G standard.
Some further implications:
- The first reason to spend $600m (+ an earn-out of $205m) would be to acquire some 300 patents (OFDM is technology that allows for particularly efficient use of wireless spectrum) and 110 engineers.
- Apart form reaping CDMA license fees, as well as fees for both 3G standards (CDMA2000 and W-CDMA), Qualcomm would have a third stream. Also, Qualcomm likes the internal competition between engineers to come up with the best technology.
- It could make the newly formed Sprint Nextel take another look at Flarion's Flash-OFDM technology. Remember, Nextel ended a Flarion trial and Sprint currently works with Intel on WiMAX. Sprint Nextel holds 2.5 GHz spectrum license covering 80% of the US and wants to introduce 4G by 2008.
- It raises questions about a vendor like IPWireless - who will buy it?