Phone Makers Join to Create Mobile Standard in Challenge to Qualcomm
The world’s largest mobile phone makers are forming a consortium to create a communications standard aimed at challenging the efforts of Qualcomm Inc. and Microsoft Corp. to dominate the industry’s future.
Led by cell phone giant Nokia, the group has focused on next-generation services that spring from the increasing convergence of mobile phones and the Internet.
The goal is to create an open standard that will make services such as picture-messaging, Internet browsing, data sharing and Java games work on all future mobile phones and networks.
“We want to avoid fragmentation,” Nokia Chief Executive Jorma Ollila said after unveiling the initiative at the Comdex technology trade show in Las Vegas.
Without the initiative, he said, “we could have had in the world perhaps a half-dozen different standards.”
Although Nokia executives wouldn’t say so directly, industry executives and others believe the initiative is aimed at preventing Microsoft, Qualcomm or any other company from cornering a piece of the telecommunications market and imposing industrywide licensing fees.
Richard Siber, a consultant in the Accenture wireless group, agrees that the initiative seems to be a direct challenge to companies such as Qualcomm, one of the major providers of mobile phone chips and wireless technology. But he called Nokia’s effort a bold and important move.
“It’s a call to the industry to coalesce for the greater good--in the collective and aggregate versus ‘what’s in it for me?”’ he said. “That’s a big statement, because no one’s ever done that before.”
With trillions of dollars invested worldwide in new airwaves licenses and networks, Siber said the industry cannot afford the confusion caused by conflicting standards.
The idea has universal appeal. After all, consumers have come to resent corporate power plays that result in incompatible instant-messaging services and mobile networks so different that customers have to buy a new phone when they switch carriers.
Nearly 20 wireless companies have joined the “open mobile software” initiative, including such phone makers as Motorola Inc., Sony Ericsson and Samsung Electronics, and service providers ranging from AT&T; Wireless and Japan’s NTT DoCoMo to Vodafone Group.
Intentionally omitted from the coalition were: Microsoft, Qualcomm, as well as hand-held device makers Palm Inc., Handspring Inc. and Compaq Computer Corp.; Internet heavyweight AOL Time Warner Inc., and mobile carrier Sprint PCS Group and others that use Qualcomm technology.
The omissions have fueled worries that the consortium’s standard will merely create another battleground in an already fiercely divided industry.
Nokia executives said the companies were not invited or consulted, but added that they are welcome to join in, as long as they commit to creating a nonproprietary and open standard.
Both Qualcomm and Microsoft have made a substantial business out of developing software or technologies and then collecting steady streams of licensing and royalty fees from other companies that want to use those creations.
In the wireless market, San Diego-based Qualcomm has rankled Nokia and others with its patent stronghold on technology used in many of today’s mobile phone chips, phones and networks. After a lengthy fight, Qualcomm’s basic technology is poised to become a core component for next-generation mobile phone systems, potentially extending the company’s lucrative licensing and royalty business well into the future as networks move toward high-speed, always-on connections.
This year, Qualcomm has also been pressing ahead with a proprietary software system called BREW, which helps developers build applications that will work on multiple devices and networks.
Qualcomm said its BREW platform could solve many of the interoperability problems targeted by the Nokia initiative, and that it also is an open standard even though there are proprietary elements to it.
“We have no issue with the idea behind [an open standard],” said Jeremy James, spokesman for Qualcomm’s Internet services division. “But what tends to also come with any approach like this is never-ending committee meetings and wrangling and an extreme slowness in ultimately rolling out new technology.”
James added that there were not enough specifics in the announced initiative to determine what threat, if any, it presents to Qualcomm’s mobile strategy.
Microsoft, for its part, has been pushing to become a major player in wireless, hoping to extend its software and systems dominance from personal computers into mobile phones and other hand-held devices.
Ed Suwanjindar, product manager for Microsoft’s mobility group, called the initiative’s aim “an admirable goal.” The mobile phone business, he noted, “has for a long time been an industry with a lot of proprietary software that was overly specific to their own devices.”
Microsoft would be happy to work with the group, and is already working with many of the companies on the participant list, he said.
“What’s lacking in that group is somebody with some real Internet experience--and I think that’s a huge mistake.”
Even though Nokia didn’t invite Qualcomm or Microsoft into the consortium, company executives repeatedly stressed that the group has no ulterior motives.
“This initiative is not anti-anybody,” said Niklas Savander, vice president for strategy, marketing and sales in Nokia’s mobile software unit. “The crux of it is that the companies involved think that it’s better to [work together] to make a bigger market than to nickel and dime everyone [with royalties].”
Qualcomm shares have rallied in recent weeks and closed Wednesday at $58.07 on Nasdaq, up 51 cents. But the stock is down 29% year to date, worse than the 23% drop in the Nasdaq composite index.
