Growth Reportedly Slowing Down in Royalty Payments

By Monica Gleberman January 11, 2012

Royalty payments for GSM, WCDMA, and LTE technology on mobile devices are about to reach the $20 billion mark according to a new report released by ABI Research.

ABI Research, which provides in-depth analysis and forecasting of connectivity and emerging technology trends globally, released a report, “Mobile Device Royalties,” which analyzes issues relating to intellectually property (IP), royalties, and litigation around handsets, mainly smartphones throughout the industry.

Royalties, which most companies rely on, are usage-based payments made from one party to another for the right of ongoing use of its assets. Royalties, sometimes called intellectual property, are often licensed out to companies allowing them to gain access to entertainment content, which it then offers to consumers.

ABI Research shows the revenue coming in for licensing fees by manufacturers would have a short-term growth period and then begin to flatten out. GSM/WCDMA lead the market in terms of royalties due to its popularity in the mobile market.

“WWAN royalties on handsets are a significant source of revenue for companies holding the largest amount of essential patents,” said Philip Solis a Research Director for Mobile Networks. “In addition to being a source of revenue for companies, patents are being used more aggressively for offense and defense against competitors,” said Solis.

ABI Research said patent litigation activity seems to have increased exponentially over the years with companies focusing on their patent portfolios as a way to maximize shareholder value.

Just this past month, Kodak alleged that Apple’s HTC’s smartphones and tablets infringe on its digital imaging technology, and has filed a complaint and multiple lawsuits against Apple. Kodak sent one complaint to the U.S. International Trade Commission that some of Apple’s iPhones, iPads, and iPods infringe Kodak’s patents related to technology for transmitting images.

Intellectual property owned by any company, according to ABI Research, will remain a valuable commodity. Remember, it was only last year that Nortel sold 6,000 patents and patents applications for $4.5 billion to six different companies after a bidding war with Google.

Apple, which has not released a comment related to the Kodak litigation, has been aggressive in protecting it’s own patents. In Spain, Apple is undergoing an antitrust investigation after losing a suit against NT-K related to media tablets. Apple has gone as far as banning its products in some countries to prevent future lawsuits from patent infringement.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO East 2012, taking place Jan. 31-Feb. 3 2012, in Miami, FL. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. For more information on registering for ITEXPO registration click here.

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Edited by Rich Steeves

Contributing Writer

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