Verizon Wireless and Broadcom in Deal

Monday, July 23rd, 2007 @ 3:10 am | Business, Gadgets

Verizon Wireless and Broadcom in Deal

Verizon Wireless will pay the Broadcom Corporation as much as $200 million to bypass a possible ban on some handsets that use Qualcomm chips.

Something tells me that Broadcom gained a little bit of leverage in these negotiations on June 29th.

One of my first thoughts when I read about this deal was that it sounded similar to last summer’s agreement between Microsoft and Universal Music Group. You know, the one where Universal gets $1 for every Zune sold. The need to get the iPod and iPhone competitors to market caused both Microsoft and Verizon Wireless to make the sort of agreements that previously weren’t seen in their respective industries.

You have to assume that $1/player issue came up in the recent Apple-Universal negotiations. It remains to be seen how the Verizon-Broadcom deal will effect the future of the wireless phone market.

Before the International Trade Commission ban went into effect, there were rumors that Verizon was going to market the LG Prada as their competition to the iPhone. Theoretically, the ban could have provided Verizon executives with some degree of coverage in the face the iPhone’s success — “We had a plan in place to counter the iPhone, but we could not bring our new phone to market due to the ITC ban.” If the iPhone continues to rewrite sales records even in the face of Verizon’s new handsets, executives at Verizon may have nowhere to hide when shareholders question the wisdom of passing on the iPhone.

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