Google and Apple are believed to be gunning for some of the more than 4,000 patents Nortel is auctioning off for its bankruptcy filing, a J.P. Morgan analyst said in a research note.
The patents Google and Apple would be most interested in obtaining are related to 4G wireless communications, also known as Long Term Evolution, or LTE in industry parlance.
4G networks are far faster than the current 3G networks, which means carriers can offer consumers smartphones that enable more powerful applications. This affords considerable opportunities for smartphone makers, analysts claim.
Google and Apple, which are streaking up the smartphone charts in the Unites States, want LTE technologies to build out their own mobile software capabilities for their respective Android and iOS platforms.
These companies would improve OS capabilities to deliver more powerful applications for gaming, communications and social networking. Google declined to comment for this story.
Fortune quoted J.P. Morgan analyst Rod Hall, who said Google and Apple's interest in Nortel's LTE patents is bad news for Nokia, Motorola and Research In Motion:
"Given the strong cash positions of AAPL [Apple] and GOOG [Google] and the relatively limited patent portfolios of both, we are concerned that prices could get bid up," Hall wrote. "We believe embattled vendors like NOK [Nokia], MOT [Motorola] and RIMM [RIM] might find it difficult to cede these patents without a fight."
Verizon Wireless launched its LTE network Dec. 5 and is currently the only U.S. carrier with a 4G LTE network on the market.
Phones capable of 4G data speeds are expected to launch in mid-2011. HTC CEO Peter Chou confirmed as much for his company Dec. 15.
Gleacher & Co. analyst Mark McKechnie tested Verizon's LTE network and found that the 4G network yielded 11M bps to 22M bps of downstream data and 7M bps to 15M bps of upstream data. Noting that faster networks provide a "tailwind for the overall smartphone industry," he added:
"We still view the two major ecosystems-AAPL and Android-as the leaders in tablets and smartphones, as strong ecosystems will take advantage of the improved capabilities and adapt to 4G with a breadth of products."
Apple, for example, could leverage Verizon's LTE network to launch its popular iPhone, he said.