Qualcomm Inc. (QCOM) is systematically getting rid of its mobile TV venture called the “FLO TV”. Yesterday, the company announced that it has decided to stop selling direct-to-consumer FLO TV devices, which include palm-sized gadgets and displays for cars. However, Qualcomm will maintain its network so that its existing subscribers will be able to see broadcast TV till spring 2011. In last July, management announced that the company is looking for a suitable buyer to divest its mobile TV venture.
 
Qualcomm’s diversification into mobile TV venture has turned out to be a real disaster despite the fact that FLO TV has carrier-partnership agreements with the two largest telecom operators, viz, Verizon Wireless (VZ), and AT&T (T). The main reason for this is that none of the popular smartphones supports FLO TV and therefore it does not get meaningful market traction. Qualcomm paid $683 million to purchase wireless spectrum on which FLO TV runs. This is the same frequency on which both Verizon and AT&T’s mobile networks also run. Furthermore, Qualcomm spend $800 million to build its mobile TV network.
 
Besides the lack of popular smartphone support, other stumbling blocks for the success of FLO TV were a dedicated pocket-sized TV for $249.99 including six months of service, a $15 monthly price tag, lack of WiFi support and nationwide network. Smartphones, especially Apple Inc’s (AAPL) iPhone, Research In Motion Ltd’s (RIMM) BlackBerry, and several devices based on Google Inc’s (GOOG) Android operating systems provides access to substantial video programming. Furthermore, online mobile video-on-demand subscription services such as Netflix Inc. (NFLX) and Hulu also emerge as major competitors to mobile TV networks.
 
Qualcomm tried a lot to popularize its mobile TV business. In August 2009, FLO TV entered into an agreement with Rentrak Corp. (RENT) to launch the industry’s first comprehensive viewership rating and advertising impression reporting system. Its partner Audiovox Corp. (VOXX) offers an in-vehicle media system that can receive FLO TV. The company offers interactive features that integrate live video with net-centric on-demand content and social media tools. But all these measures have failed to boost subscribers’ attention.
 
In the third quarter of fiscal 2010, operating income from this segment was just $6 million, down 50% year over year; however, operating loss in the same quarter was $50 million. Qualcomm has now decided to sell this business although it is still undecided whether it will sell the entire division, including the wireless spectrum that the company owns or just the non-spectrum part of FLO TV. Several analysts estimate that its precious wireless airwaves itself will bring in more than $2 billion to Qualcomm.
 
The company also informed that in case of FLO TV closure, it will lay off some employees. The company will adequately compensate the employees or redeploy them in the organization. Qualcomm will also adequately compensate its existing customers and business partners.
 
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