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Motorola's new strategy is 2.5G/3G licensing

Motorola's new strategy is 2.5G/3G licensing

Motorola plans to make the technology and designs underlying its 3G (third-generation) and GPRS (General Packet Radio Service) mobile telecommunication products available to its rivals for them to resell under their own brands, Motorola said in a statement Monday.

Motorola expects to make its so-called 2.5G (GPRS) reference designs available to other vendors in the first half of 2002, with an alpha (trial) version of its 3G technology ready for other manufacturers in 2003, the company said.

The company will bundle together the chipset, software, development tools, reference design, test environments and type certification support, much in the same way that the PC market resells its products, according to the statement.

Rather than a radical new approach to marketing new mobile technologies, International Data Corp. (IDC) analyst Paolo Pescatore sees the move more as a way for the company to cover costs. "Motorola is covering its back so it can minimize cost as much as possible, particularly when it comes to its production costs," said Pescatore, who is based in the U.K.

As a general rule, Motorola has used its technology in products with the Motorola brand, but the slow rollout of GPRS handsets and the general slowdown in the mobile market both in Europe and the US is forcing the company to cut its costs, Pescatore said.

"If you read between the lines, you could see this deal as one that is about outsourcing, or it could possibly be similar to the deal that Qualcomm has," Pescatore said.

Earlier this month, Qualcomm and Nokia and announced that they have expanded the terms of a 1992 cross-licensing agreement for CDMA (Code Division Multiple Access) equipment and components.

Under the terms of the expanded agreement, Nokia will pay royalties to Qualcomm for the right to make and sell infrastructure equipment and wireless systems based on CDMA-related patents held by Qualcomm. The licensing deal also gives Qualcomm access to Nokia patents covering CDMA-related components, including multimode integrated circuits.

"Motorola can reduce its costs (in a similar way) by selling technology on to another company. Basically, Motorola is in line with everyone else in the industry," Pescatore said.

IDC is a division of International Data Group Inc., parent company of IDG News Service.


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