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The tussle for domination in the wireless communications market intensifies today with an announcement from {complink 2657|Intel Corp.} that it has agreed to purchase about 1,700 "patents and patent applications" related to key technologies in the segment from intellectual property developer {complink 2677|InterDigital Communications Corp.}.
Intel, the world's No. 1 semiconductor vendor by sales, said it will pay $375 million for the portfolio, which the companies in a statement said is "related to 3G, LTE and 802.11 technologies."
In the statement, InterDigital described itself as "an active developer of advanced wireless technologies including WCDMA (Wideband CDMA), HSDPA (High Speed Download Packet Access) and HSUPA (High Speed Upload Packet Access) 3G technologies as well as LTE (Long Term Evolution) and LTE-Advanced 4G technologies." These technologies form the core of latest advances in wireless communication and are being deployed across multiple platforms in handsets and tablet computing.
InterDigital gains validation of its business model with the transaction and secures additional cash resources to finance R&D efforts in other market segments. Its stock price shot up almost 30 percent on the news to $29.40 from the closing price of $22.88 on Friday, boosting the market value to $1.3 billion.
InterDigital said the sales are a part of its plans to broaden operations "to include patent sales, licensing partnerships and other possibilities," according to Scott McQuilkin, senior executive vice president, strategy and finance at InterDigital, in the published statement.
The company had been seeking to sell itself but failed previously to secure a buyer due to stagnating sales and declining profits. It has now evolved that strategy to include a piecemeal sale of assets and the Intel transaction represent a validation of the new focus. InterDigital said it still has other IP portfolios available for sale. The assets being acquired by Intel involve "a small portion of our overall portfolio," McQuilkin said.
This transaction adds to the IP resources Intel has amassed as it forges ahead with plans to play a bigger role in the wireless communications market, an area where the company has in the past poured massive amounts of money via acquisitions. It is expected that the InterDigital deal will strengthen its position in the smartphone and tablet PC markets where Intel has been seeking a role for years but only succeeded in scoring recent design wins with wireless handset vendors.
"These patents will support Intel's strategic investments in the mobile segment," said Doug Melamed, Intel senior vice president and General Counsel. "The addition of these patents expands our already large, strong and diverse portfolio of intellectual property."
I am one of the few people who hasn't considered the PC dead (yet!) And I'm not ready to…unless Microsoft's Surface can do everything my PC does.
It probably won't. Then there's also the business adoption rate. I doubt most businesses will want to replace their current infrastructure devices with tablets. At least not any time soon.
I like PC – Desktop PC with two 27inch monitors. I am waiting for Windows 8 and will upgrade soon with it.
The trend in developing countries is a natural result of increased computerization at all levels. In just couple of years here in India, all majority of government services like tax payment, income tax returns filing, railway reservations, airline reservations, share transactions, banking almost everything has gone on-line.
This transformation has led to each family necessitating a PC at home. PC has become a household gadget like TV or fridge.
On education front also the entry level at which the students would want to have their own PC/laptop has come down from graduate level to school level.
Government has made PC literacy a must for a government job right from the lowest clerk level.
As a durable and shared device PC or a laptop fares better than a smartphone or a tablet.
So it is natural that the PC demand in the developing countries is on upswing.
I wonder if the growth is in the developing countries then will the margins (and earnings) be lower? This might make for a not so rosy next few years.
@ Barbara,
i,m with you on that, for now there is yet to be a complete and capable replacement for PC
@porcharle,
For now, businesses that are really bent on using tablets instead are still very few.
I think there is this thing about trying new things generally, Its take time to adjust to new things.
@prabhakar,
you are right on that, on the other hand, i,m not sure if the government of these developing countries could trust her workers with tablets yet.
The options might be to train them which may be an additional expenses
then proper handlings/ maintenance
With high volumes i think they can make good margins and establish themselves in the markets.
Government has made PC literacy a must for a government job right from the lowest clerk level .
I agree with you on that. I think that's the trend now in most of developing nations, there is encouraging use of information and communication technology within government agencies.
These technologies form the core of latest advances in wireless communication and are being deployed across multiple platforms in handsets and tablet computing.
This a nice move by Intel, capturing these technologies would indeed make Intel stay ahead in field of semiconductor.
That is quite the purchase! It may help Intel to advance even further and grow larger in the marketplace.
As the governments of developing nations invest more money development of new infrastructure there will be positive growth in the demand for pc's. But the growing tablet and ultra book markets can have negative impact on pc sales.
Interesting post, Bolaji. Do you have any idea about the growth rates of laptops and tablets? It may be interesting to compare the PC growth rate with them. Growth rate for PCs may not be that low but it may be very low compared to laptops and tablets.
“ This transformation has led to each family necessitating a PC at home. PC has become a household gadget like TV or fridge. “
@Prabhakar: I agree. From being a luxury item 4 or 5 years back, PCs have become a necessity. One of the factors has certainly been the increase in demand whereby every household is required to have a PC for necessary tasks like filling out online forms etc. The other has been the reduction in prices over the years which has made PCs affordable for everyone.
“I wonder if the growth is in the developing countries then will the margins (and earnings) be lower”
@Flyingscot: I think the growth in developing countries may be higher compared to developed countries. In developd countries, PC market is already saturated. Every household has a PC or a laptop. Wheras in developing countries, there's still room for growth and the number of PCs is expanding as they become cheaper and more affordable.
$375 million seems like a hefty sum, considering the IP is a combination of patents and filings that haven't issued as patents. That averages out to $220k per patent and patent application. They must have some technology that Intel is keenly interested in.
By 2016, emerging markets will represent approximately 69 percent of total global PC sales, according to IDC
Bolaji, Great! It's a good business opening for electronics supply chain industry and one not be missed. I'm sure more resources have been diversified to this part of the world.
this average is far below to what IBM got last year and this year for the patents of sales to google and FB. The average was around 1million so you can image the benefits of building a large portifolio.
From that perspective, it sounds like they got a very good deal.
The people that are using the tablets now typically won't be the decision-makers. It is the tech savvy that like to stay on top of new trends. Hopefully those people will make the information transfer to the key personnel that would be responsible for adopting new technology.
This information proves the PC isn't dying anytime soon! It is still a big necessity in this world. I think it will be a while before other technology (laptops, tablets) take over any.
With more and more services being virtualized, will we get to a point when we definitely don't need to change the PC? Maybe a better, bigger display but the CPU would remain the same.
It's possible, Mr. Roques, but I doubt it. Each Windows OS version that comes out is more demanding on the system than the previous version. Also, any users who use PC's for gaming or CAD work (for example) will always be upgrading, as the programs are always becoming more demanding on hardware, as graphics and computation requirements increase.
@Clairvoyant, I think it might be true. Consider XP after Win 98 then consider Vista or 7 over Windows XP. Each need a better system to function effectively. The baseline specs on the installation disks suggests the same. Since, the computational power is growing exponentially I think that increase in resources at the program level is going unnoticed.
Well, maybe someday those apps will get virtualized but yeah, a group of people will always need more and more computing power.
But what about the rest of us? With the thin clients that HP, Dell and nComputing are pushing so hard, they might be digging their own grave.