InterDigital slowly tilts the ship from licensing to solutions

Such is the importance of a show like Mobile World Congress to a company like InterDigital that the mobile technology vendor spends a full third of its annual marketing budget on the event.

At the show, InterDigital outlined a future in which its three main business verticals – wireless, video and IoT – will gradually converge. So, does convergence, which is arguably a visible trend already in many cases, mean fewer products, therefore less revenues, and ultimately a far smaller InterDigital in years to come?

Not according to Patrick Van de Wille, the company’s chief communications officer, who believes this convergence will put InterDigital in prime position to deliver even more advanced developments to the standards bodies and academic organizations, in which it has been such a weighty contributor for years.

It would help his case if InterDigital broke out finances across the three sectors mentioned, as its latest financial report gives little in the way of convergence clues. While the company tends to play down its reliance on its well-known patents licensing business, its most recent filing – for Q4 2018 filing – shows that revenues from patent royalties accounted for over $72m of the total $75.3m in quarterly revenues.

That is, however, a fall from $92.2m in patent royalties from a year earlier, while technology solutions revenue rose from $2.2m in Q4 2017, to $2.5m a year later – still a drop in the ocean of total revenues, but it shows that non-IPR revenue has gone from 2.3% to 3.4% in one year.

The situation is fluid. InterDigital has spun off several of its technology developments in to standalone companies such as XCellAir (since acquired by FON); meanwhile, it recently bolstered its IPR revenues with the acquisition of Technicolor’s patent licensing business, completed in July 2018. This took InterDigital into a new frontier of video technology, which has been hard work so far, with a year-on-year decline of almost $20m seen in Q418.

Both the consumer technologies and patents licensing divisions could be boosted by the subsequent buy of another piece of Technicolor, its Research & Innovation arm. That deal is yet to complete, but likely to happen in the second or third quarters of this year.

With InterDigital being an active contributor in the development of the HEVC video codec standard,, and also leading the standardization of the HEVC Scalable Video Coding (SHVC) extension, the conversation inevitably turned to codecs. Asked whether the emergence of the royalty-free codec AV1, fronted by the technology heavyweights of the AOMedia group, was of concern to InterDigital, Van de Wille claimed that, although the idea of royalty-free seems attractive, it is rare to see the best engineers put on the case.

“We are committed to being fair in licensing. Royalties advancing is clear to see and the goal of standards is to eliminate barriers and advance research,” added Van de Wille, giving the example of Chinese firm Oppo, which he claims has done virtually no wireless research, but still achieved a major presence in mobile.

InterDigital was demonstrating its edge-and-fog 5G-Coral in Barcelona, enabling a phone to interact with a 5G edge server and control the view from a 360-degree camera. “Our demo this year is more about watching the view change as you move the device. It has some 5G latency in it, maybe a touch more than what we’ll eventually see in 5G, but it feels immediate,” said Van de Wille, citing live sports, group gaming and virtual workplaces as some of the most immediate potential real life use cases.