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

Qualcomm is buying 2,400 mobile patents from Hewlett-Packard. What will Qualcomm do with these new assets?

Jan 25, 2014 at 10:45AM

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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Fool contributor Anders Bylund has no position in any stocks mentioned. The Motley Fool owns shares of Qualcomm. Try any of our Foolish newsletter services free for 30 days.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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