Interopera-what?

Qualcomm's Edge

Companies like chip manufacturer Qualcomm confuse some journalists, particularly those who might consider sales of product the principal source of a company's revenue.    If operating revenue (from chip sales) goes down during the course of any one year, how is it that overall revenue increases over the same time?

The answer is through leveraging innovation.

The reality is that Qualcomm has long considered itself not as a mere producer, but as a licensor of enabling technologies.   Anecdotally, in 1999, the company came to the realisation that it didn't have to produce any products in order to be a profitable company.  In fact, it realised that it could actually make money from competitors' sales.

Late last year, Engaget posted some photos of Qualcomm's "Patent Wall" in its San Diego headquarters (see below).   The pictures were interesting to me, and not for reasons related to interior design.  It is clear that the company places significant value on its intellectual property.   

The Engaget article containing the pictures below suggests that the patents on the wall comprise only about 10 percent of the total patent portfolio owned by Qualcomm, which apparently numbers around 13,000 patents in total.  If only a quarter of those are of strategic value, this is all the explanation we need.  Strategically leveraged IP safeguards the overall revenue position of the company regardless of the fluctuating world of of sales performance and operating revenue.  

Strategic Factors Affecting Licensing Negotiations

Recently we looked at how a party's market role or position might affect the tone of a negotiation.   In this post we'll take a first look at a number of other strategic factors that can influence the shape of a licensing deal.    This is a very broad topic, so we will list these generally first.   In our next post, we will take a look at some industry examples.

For the sake of clarity, we'll assume below that you are doing the licensing. If you're a licensee, simply reverse the analysis.

Licensing Negotiations - profiling the opposition

Before entering into any technology license negotiation, it's sensible to first develop a profile of the party you're negotiating with.   With IP negotiations, this can be done in a number of ways, but in this post we'll talk about how a party's role in the market can impact on their profile.

Here's a quick breakdown of how a party's market role can affect their negotiation stance:

Reports of the death of custom enterprise software have been somewhat exaggerated...

Many observers believe that with the advent of Software as a Service (SaaS), custom enterprise software may have had its day.   The demand for various models of cloud services has increased.   This model often comes hand in hand with a "best of breed" software selection approach which reduces the need for custom-made software solutions in the IT services industry.  But will the continuing trend towards this model mean the death knell for custom designed software?   It's not likely.   In fact, as we suggest below, there is a significant likelihood that a demand for customized enterprise solutions will continue.    This means that a good understanding of how to negotiate enterprise software contracts will be a necessary skill.