Why Is Qualcomm Buying Hewlett-Packard's Mobile Patents?

Hewlett-Packard (NYSE: HPQ  ) has built a respectable portfolio of mobile patents over the years, largely by acquiring smaller companies in the space. Yesterday, chip designer Qualcomm (NASDAQ: QCOM  ) took the whole shebang off HP's hands, buying 1,400 U.S. patents and another 1,000 abroad -- all covering fundamental technologies in the mobile market.

The companies didn't put a price on the deal, which probably points to a fairly low sum. The SEC tends to frown on keeping material, investable information under wraps, so this deal most likely wouldn't move the needle in either company's earnings reports.

So HP is done exploring the mobile space. After this deal, I don't expect any smartphones or tablets out of Hewlett-Packard, other than perhaps the odd Windows-based tablet that's more PC than smartphone. You most definitely won't see any HP products based on the defunct Palm or iPaq brands, since Qualcomm now owns the proprietary and exclusive parts of those platforms.

For HP, the move would have been right at home in ex-CEO Leo Apotheker's software-centric business model. Successor Meg Whitman must be narrowing down the markets she's chasing from "everything, everywhere" to a more manageable target, and I can only applaud this newfound focus.

Pick your battles, ma'am.

Expect more Qualcomm-branded gadgets in the years ahead, like this Mirasol concept device -- but with a certain Palm flavor. Image source: Qualcomm.

What's the big idea for Qualcomm?
But why is Qualcomm picking up the pieces of HP's failed mobile ambitions?

The official word, via a joint press release, is that the deal "further enhances the strength and diversity of Qualcomm Incorporated's industry-leading mobile patent portfolio and will enable the company to offer even more value to current and future licensees."

On top of the direct value, Qualcomm will also be able to wield the Palm and iPaq patents as a shield against litigation from other mobile players. It's the whole "mutual assured destruction" strategy at its finest.

But wait, there's more!
You see, Qualcomm is more than just another chip maker. The company is also attacking the mobile space from several other angles. The low-power Mirasol display technology is one such effort, blending right into Qualcomm's recent Toq smartwatch launch.

I would not be surprised to see Qualcomm launching consumer-grade hardware that vaguely reminds you of the Palm Pilot in its heyday. Maybe it's a watch, perhaps a medical information system, or even a Qualcomm-branded smartphone. Anything is possible. Not anytime soon, you understand -- developing these products takes time.

But do keep an eye on Qualcomm gadgets in the next couple years, far beyond just shipping chips to established smartphone and tablet builders.

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  • Report this Comment On January 25, 2014, at 11:46 AM, ajwallach wrote:

    I doubt if Qualcomm will produce Qualcomm-Branded products. Their own products would jeopardize their sales to other manufacturers. You need to remember that at one time they did produce a phone but sold that division to Kyochera.

  • Report this Comment On January 25, 2014, at 7:48 PM, dilfarb wrote:

    HP just announced two phablets for the India market and has a host of Android tablets out there that they continue to expand. Neither require use of the patents they unloaded on qualcomm; either that or there is a clause in the sale granting HP continued use.

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