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When Forbes put Qualcomm chief executive Paul Jacobs on its cover last November, they photographed him while he was in the middle of playing basketball, wearing a T-shirt and a towel draped over his shoulders. Something tells me he's sweating a lot more now.

The decision by Nokia on Thursday to pull out of its CDMA joint venture with Sanyo wasn't explicitly blamed on Qualcomm. The press release simply said, “recent developments may indicate that the CDMA emerging markets business case is looking more challenging.” In a Reuters interview, however, a Nokia executive said the terms Qualcomm was laying down to allow access to its patents for the joint venture would have “limited our freedom.” Nokia said it will wind down its CDMA R&D efforts by April of next year and will participate in limited CDMA opportunities.

If nothing else, this development validates a prediction made by a Cisco vice-president to one of our editors two years ago that within five years, you won't see a CDMA handset on the market. The withdrawal of Nokia is not an insignificant rebuke to the standard, especially when you take into account its recent decision to join forces with Siemens and provide telecommunications equipment that will undoubtedly include cellular network gear.

We will probably never know what Qualcomm did (if it did anything) to provoke Nokia's wrath, but it certainly appears like revenge for the antitrust suit filed against Qualcomm in Europe by a collection of firms that includes Nokia. Much like Microsoft, Qualcomm seems to be a magnet for such litigation. It is also under investigation from the U.S. International Trade Commission based on antitrust complaints for Broadcom, which has cast itself in the Netscape role of poor put-upon startup. Normally, Qualcomm has been content to respond to such tactics with countersuits, even as companies like Nokia continue to pay millions for its intellectual property. A situation this dysfunctional was bound to implode sooner or later.

There's always GSM, but the problem is that several of the biggest players in the Canadian telecommunications space, including Bell and Telus, have already thrown their hats into the CDMA ring. Both incumbents have based their much-vaunted 3G EVDO network on the standard, and they are unlikely to pull back on those investments just because the chipmakers and the handset makers can't get along. Rogers, among others, has chosen Enhanced Data Rates for GSM Evolution (EDGE) as its own 3G platform, but several experts consider this weaker than the CDMA 1XRTT alternative.

Maybe Qualcomm is ready to give up the US$250 million it gets in royalties from Nokia every year, but as it withdraws from the CDMA market Nokia is also diverting considerable marketing resources that help boost the standard. Just a few days ago for example, Nokia released a pair of CDMA camera phones, which were greeted with the usual enthusiasm by various media.

The rise of GSM in other markets also raises the question of whether globalization will have a tangible impact on which standards ultimately win out over each other. CDMA may have the performance and features, but GSM has the price point. On a worldwide basis, the economies of scale may not favour Qualcomm. Neither might some of the trends in technology, such as Intel's attempt to use WiMax to circumvent the need for Qualcomm chips, and the overall push towards open standards rather than proprietary ones. Faced with the same opportunity, a lot of companies would probably have locked away the CDMA secret sauce as Qualcomm did. As wireless communications evolves, holding onto that sauce in perpetuity could start to look like really bad taste.

sschick@itbusiness.ca

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