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InterDigital talks convergence, taunts AOMedia

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. That’s why Faultline Online Reporter’s brief coverage of InterDigital from last week, buried deep in a Technicolor write up, deserves a follow up – as there is a lot more to come from InterDigital than its recent dealings with the French set top firm.

As noted in our MWC issue, InterDigital outlined to us 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 much smaller InterDigital in years to come?

Not according to Patrick Van de Wille, InterDigital’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 the company has been such a weighty contributor towards for years.

It would help his case massively if InterDigital broke out finances across the three sectors mentioned, as its latest financial report gives little in the way of convergence clues. It’s interesting though that Van de Ville’s opening gambit upon our meeting in Barcelona was to heavily downplay InterDigital’s patents presence, specifically brushing aside our recent description of InterDigital as a “vociferous patents advocate.”

A quick look at its Q4 2018 filing tells a different story though, with revenues from patent royalties accounting for over $72 million of total $75.3 million quarterly revenues. That is, however, a fall from $92.2 million in patent royalties from a year earlier, and the comparison shows an opposite shift in current technology solutions revenue, bringing in $2.2 million in Q4 2017, then rising to $2.5 million in Q4 2018. A drop in the ocean of total revenues, admittedly, but it shows current technology solutions revenue has gone from 2.3% of total quarterly revenues, to 3.4% in one year. In the same period, revenues from total patent royalties have slipped from 96.9% to 95.6% in the same period. Fine margins indeed, but a trend worth keeping an eye on, nonetheless.

But is this a tiny sign of convergence or a mere blip on the roadmap? Well, the acquisition of Technicolor’s patent licensing business completed in July 2018 and clearly did not help the situation with a year on year decline of almost $20 million. Although, this could be a case of teething problems under new ownership, with InterDigital admitting that this particular area of video is a new frontier for the company, citing the creation of a new licensing opportunity in the consumer electronics market, accompanied by a commitment to get recurring costs back to pre-transaction levels.

But both the consumer technologies and patents licensing divisions could be boosted by the subsequent buy of Technicolor’s Research & Innovation arm. As mentioned last week, Van de Wille was reluctant to talk about immediate projects going forwards through the Technicolor R&I unit, particularly as the deal is yet to complete, estimated to happen either in Q2 or Q3 this year at the latest.

With InterDigital being an active contributor in the development of HEVC and also leading the standardization of HEVC Scalable Video Coding (SHVC) extension, the conversation inevitably turned to codecs. We asked if the emergence of the royalty free codec AV1, fronted by the technology heavyweights of AOMedia, was of any immediate concern to InterDigital? Perhaps over-defensively, Van de Wille claimed that although the idea of royalty free seems attractive, you rarely see the best engineers put on the case. We have dropped a quick email to AOMedia on the off chance it wants to defend its corner.

Gabe Frost of Microsoft, who also serves as AOMedia’s Executive Director, told Faultline Online Reporter last year that the group had drafted in engineering experts alongside a revered legal team to assess AV1 processing conducted independently by member companies, so we have a sneaking suspicion he might disagree with the alleged lack of engineering prowess.

“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 no wireless research but all of a sudden has a major presence in mobile.

Remember that Technicolor was the odd one out among all the companies chasing HEVC patents and membership of the two patent pools MPEG LA and HEVC Advance, which is why we suspected the patent licensing business might fall to an AOMedia member company, rather than an opposer like InterDigital. That said, Technicolor claimed to have 30,000 patents and patent applications prior to the sale, in the areas of video coding and image processing, telecommunications, user experience, security and displays.

Circling back last of all to MWC-specific showcases, InterDigital was demoing its edge-and-fog 5G-Coral demo last week, in which a phone interacts with a 5G edge server and controls 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.

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