HTC Buys S3 Graphics, Grows Patent Portfolio

Smartphone maker HTC is bulking up its graphics capabilities and patent portfolio by buying S3 Graphics from Via for $300 million.

HTC is making an aggressive move in the highly competitive smartphone world, buying S3 Graphics from chip maker Via Technologies and investment firm WTI Investment International for $300 million.

The move not only gives HTC greater graphics capabilities—S3 makes graphics chips for mobile phones, tablets, PCs and game consoles—but also more leverage in its ongoing legal dispute with Apple over alleged patent infringements.

The two companies have been trading legal shots since last year, when Apple officials in March 2010 filed a lawsuit against HTC, claiming the Taiwan-based device maker had infringed on almost two dozen Apple patents for its iPhone, relating to the smartphone's hardware, architecture and interface. HTC executives denied the claim, and in May 2010, in a filing with the International Trade Commission, accused Apple of infringing on HTC patents and asking that such popular Apple devices as the iPad, iPhone and iPod not be allowed in the United States.

The acquisition of S3 Graphics would further bolster HTC's patent portfolio, giving it more leverage and protection when dealing with Apple and the like in an increasingly litigious smartphone space. HTC will gain 235 patents and pending applications from S3, according to reports.

S3's image-compression technology is used in a number of game consoles, including Nintendo's Wii and Sony's PlayStation, and is increasingly being incorporated in other devices, including smartphones and tablets. And the company is no stranger to patent litigation. On July 1, the ITC ruled that Apple had infringed on two S3 patents involving image compressing and image data formats.

"Buying a patent portfolio will be very useful to us," HTC CFO Winston Yung said, according to Bloomberg News, though he did not comment on specific legal disputes.

Apple officials have been aggressive in pursuing legal action against smartphone competitors they say have infringed on Apple patents. The company also recently bulked up its own patent portfolio, as part of a consortium that bought bankrupt Nortel Networks' patents for $4.5 billion. Also in the consortium were Microsoft, BlackBerry maker Research In Motion, Sony, EMC and Ericsson. Google lost out on the patents, which some analysts said the company needed to protect itself from litigation in the mobile-technology market. Googe's Android mobile operating system is used by a growing number of mobile-device manufactures—including HTC—and is the key competitor to Apple's iPhone and iPad devices.

In the Nortel deal, Apple and the others reportedly bought 6,000 patents and patent applications that cover such areas as wireless, 4G technology, Web search, social networking, data networking, Internet, service providers and semiconductors.

News of the S3 deal came the same day that HTC announced record second-quarter financial numbers, including $608 million in income, more than doubling the income from the same period last year. HTC was helped in large part by demand for a number of popular smartphones, including the Desire HD, Thunderbolt and Sensation devices.

The HTC-S3 deal had the fingerprints of WenChi Chen and his wife, Cher Wang, all over it. Cher Wang is chairman of both HTC and Via, and is also a large shareholder in WTI. WenChi is CEO of Via. Via bought S3 in 2001 to improve the integration of graphics capabilities in its processors and chipsets. It sold part of the company to WTI in 2005.

Of the $300 million HTC will pay for S3, Via will get $147 million and WTI $37 million. While HTC will own S3, it reportedly will give a perpetual license of the S3 patents to Via, enabling the x86-based chip maker to continue to strengthen the graphics capabilities in its products.

HTC and Via officials expect the deal to close before the end of 2011.

Technology: The end of all-you-can-eat wireless data plans

It's hard to be grateful to a company that offers its customers less value. But give Verizon Wireless this much credit, at least: When it announced that new subscribers would no longer be able so sign up for unlimited data use with the smartphones they buy, at least it gave them the chance to spend lessif they don't do much streaming or downloading.

According to my colleague Nathan Olivarez-Giles, Verizon will replace its $30-per-month unlimited data plan Thursday with four alternatives: $10 a month for 75 megabytes, $30 for 2 gigabytes, $50 for 5 gigabytes and $80 for 10 gigabytes. Going over your limit will cost you $10 per gigabyte. But if you're an average user -- according to Cisco, the average iPhone user consumes 355 megabytes per month and the average Android user consumes 209 megabytes -- you can take the entry-level tier and still keep your bill well below $30.

Now, compare Verizon's move to AT&T's announcement  earlier this year that it was ending its unlimited data plans for DSL customers (it already had bandwidth limits on its wireless plans). In AT&T's case, no one will pay less. Instead, some customers -- those who exceed the new bandwidth cap -- will pay more.

I don't blame wireless carriers for seeking to make the heaviest users pay the most for data plans. All of their customers in a given coverage area share bandwidth with one another, and those who stream video take up more of this shared resource than those who are just sending sending tweets. And network operators say a small percentage of their customers are responsible for a hugely disproportionate share of the traffic. 

The caps will be problematic, though, if they don't grow over time. As it shifts to 4G technology, Verizon will not only have more bandwidth, it will be able to make more efficient use of it. The same is true for the other carriers that have invested in similar 4G technology. At the same time, the average amount of bandwidth used by its customers is expected to grow rapidly, encouraged by a proliferation of bandwidth-hungry apps.

Verizon's move strikes me as less troubling than AT&T's in one other way as well: Consumers typically have more choices in wireless than they do in fixed broadband. The wireless market has four major players today, but in most communities there are only two wired broadband providers: the local cable operator and the local phone company.

Of course, if federal regulators approve AT&T's proposed purchase of T-Mobile, there will be only three mobile carriers left. That's assuming Sprint, the smallest of the three, isn't killed off  by the market muscle of Verizon and AT&T.

Verizon has said it doesn't plan to oppose  the AT&T-T-Mobile merger. Its shift to limited data plans, however, may make regulators less receptive to the idea of letting AT&T swallow up a competitor with a penchant for discounting and a different approach to bandwidth caps.

Android Google Maps takes users offline

Google Maps has always been one of the top apps on the Android platform, with new features added regularly by Google. A new version has rolled out today that adds useful features that will be popular with both those in urban areas and those in rural spots.
Google has added notifications in Maps for those using public transportation on devices with GPS enabled. The new version lets users know when they reach the proper stop for their current route, or if they need to make a route transfer. Since it uses GPS it won’t do much good on subways, but bus riders will appreciate the new feature.
Another new feature in Google Maps levels the playing field for those using an Android smartphone as a navigation device. One of the arguments in my recent debate with colleague Adrian Kingsley-Hughesfor using dedicated GPS devices versus smartphones for in-car navigation was the inability of smartphones to get online to access map information in areas without cell service.

This new version of Google Maps adds the ability to download maps to the phone for navigation on short trips into areas without web connectivity. Before heading into the no service zone simply download the map for the area. Downloaded maps can also be used for offline searches in addition to navigation. Being in areas without connectivity gets a lot more bearable with these downloaded maps.
You can get the new Google Maps in the Android Market.

Four Reasons Businesses Should Start Using Facebook Video Chat

Facebook held a media event Wednesday morning to unveil 'something awesome'. That something awesome is that Facebook is adding a group chat feature, and the ability--in partnership with Skype--to conduct video calls from within Facebook.


Awesome is in the eye of the beholder. Personally I would have been much more impressed if the 'something awesome' was the rumored Facebook iPad app. Awesome is also relative. These features may be awesome for Facebook users compared with not having them, but compared with rival platforms the Facebook features just play catch up, and don't even quite get there in some respects.

While the level of awesome can be debated, the addition of video chat within Facebook is welcome. Here are some of the immediate benefits for businesses to get on board with Facebook video chat.

1. You are already there. People spend more time on Facebook than on any other online destination--I assume that includes you. Your company has invested time and effort establishing a presence on the social network, and you have reached out and formed connections with coworkers, customers, vendors, and partners. If you are already staying connected and keeping in touch via Facebook, it is only natural to just click on a contact to video chat when the need arises.

2. They are already there. Facebook has more than 750 million members. With a pool of contacts that deep, you can be almost certain that whoever you want to speak to is out there--and because people spend more time on Facebook than any other online destination, odds are fair they're online and waiting for your video chat. It would almost be more difficult to find contacts who aren't available.

3. Saves time and money. Some things are just done better face to face. Some people are more productive when they can engage eye to eye. But, you don't have to be physically in the same room to accomplish that--you can use Facebook video chat. Traveling to meet someone face to face takes time--whether it is down the hall to visit a co-worker, across town to meet with a customer, or around the world to negotiate with a supplier. Trips beyond the office building also incur additional costs such as airfare, lodging, meals, etc. Facebook video chat is a click away.

4. The price is right. It is free. That is a hard price to beat. Companies of all sizes have invested vast sums of money over the years implementing video conferencing infrastructures. Now, Facebook is handing it to you for free--use it.

Facebook video chat is limited to one-on-one calls, unlike Google+ Huddles which allow for group video chat, or even group simultaneous watching of YouTube videos. There are certainly some practical business applications for the group aspects of Google+. Hopefully, Facebook will continue to expand on the video chat concept and include a group video chat function at some point. What would really be cool is if Facebook, Google+, Skype, Apple FaceTime, and any other competing video chat platform could all get on the same page so they could all work together, but I won't hold my breath.

The initial implementation of Facebook video chat may be a little rough around the edges, but it is still good news, and it is a valuable tool that businesses can start taking advantage of immediately with the other 750 million Facebook users.