The millions of mobile phone users in India are aware of the silent war that is developing as a high stake tussle is expected to drive the handset process. Also, a change in the landscape of businesses is to take place. Each cell phone is a virtual black box that has hundreds of patented technologies. Some owners of these are leading technology companies in the world. These are demanding their share in the second largest mobile market.
Lately, global companies including Sisvel, Core, SirpoLab and Nokia have claimed royalty from the Indian manufacturers such as Lava, Micromax, Karbonn, Intex and iBall. This way, the companies can price out the domestic firms and inundate the Chinese brands market or force the Indian consumers to split out a lot more for a device.
It started with the Swedish giant Ericsson two years back as the firm moved to the court to extract royalty from the handset sellers in the country. It was considered as a case of isolated bickering over the royalty payments between a local and foreign company. Now, it is has triggered a wave of actions by the other global companies. Vitalized by the court victory of Ericsson, SpiroLab, Sisvel and Nokia have shot letters to the handset sellers seeking royalty.
It is likely that Qualcomm is also planning a similar move. Over the past two months, some global companies have sent letters seeking royalty to the handset firms. The royalty should be asked on the part that has been using the technology not the full device. A margin of 3 to 4 percent would be squeezed if the company’s royalty payments are done. If the handset makers pay the royalty, they will pass the cost to the consumers. In China, the royalty can be a maximum of 0.019%, but in the US, it can be 0.5 to 2 percent based on the smallest saleable practicing unit’s value. This means that it is a royalty on the chipset and not the entire phone’s value. Moreover, the companies are not clear on what technologies they might be asked to pay royalty for.
