Relationships with key customers have often been choppy. A significant portion of the Company’s revenues is concentrated with a limited number of customers as the worldwide market for wireless telecommunications products is dominated by a small number of large corporations. Revenues from three customers of the Company’s QCT, QTL and QWI segments, each comprised an aggregate of 13% of total consolidated revenues in fiscal 2006, compared to 15%, 13% and 11% respectively of total consolidated revenues in fiscal 2005 and 15%, 15% and 10% respectively of total consolidated revenues in fiscal 2004.
Qualcomm is an extremely controversial company, perceived as a newcomer and interloper by older, more established, and primarily European, companies. For years, they stubbornly refused to adopt CDMA while spending hundreds of millions trying to find ways to engineer around Qualcomm's patents. Whether WCDMA actually is a necessary technology or just a blatant attempt to engineer around Qualcomm's patents is a matter of much dispute. What is beyond dispute is that CDMA would have worked for 3G European networks and that - in the end - they have accomplished little in trying to engineer around paying royalties to Qualcomm. Another key market that has resisted Qualcomm is China, which - having a closed market - has both only allowed CDMA to be deployed by a relatively small provider and heavily invested in likewise circumventing Qualcomm's patents.
There has been extreme hostility to the very thought of cooperating with Qualcomm, with established companies feeling that their technology ought to be freely available (the courts seemingly do not agree). But Qualcomm is also often seen as overly "aggressive”, having pushed for high royalties and refusing to allow potential partners some slack given their strong position, thus guaranteeing that potential partners would resent them and seek ways to circumvent them. The blame is difficult to establish, but there is no question that the extreme ill-will that dominates this area has and continues to have a negative impact on the company.