Phone and Beyond
Unleashing Its Technology to a Wider Range of Devices, Qualcomm Aims to Become Intel of Mobile Internet
By Kim Tong-hyung
Staff Reporter
SAN DIEGO, Calif. ― It's not a stretch to say that Qualcomm's technology created the third-generation (3G) world. Paul Jacobs, chairman and chief executive of the San Diego-based chipmaker, is confident that his company will matter just as much following the global move toward 4G and beyond.
The advancement in wireless technologies and networks is now producing a slew of portable Internet devices that are obscuring the boundaries between phones and computers, while changing the rules of the game in the high-tech industry, Jacobs said.
The developments will have Qualcomm working closer with major developers such as Samsung Electronics and LG Electronics, to leverage their successful partnerships in mobile phones to a wider range of products, and also moving nearer to declaring Intel as a main business rival.
``What we are seeing is a convergence between communications, computing, consumer electronics, productivity, Web services and entertainment. All these things are coming together and we are positioning ourselves well to compete in those spaces with new capabilities on multimedia, processors and wireless technologies aimed at these different areas,'' Jacobs said in an interview with The Korea Times at his San Diego office.
``We are going to see both 3G and 4G as we go forward and more devices connected to the network, so we are working together with our partners on new computing devices and new entertainment devices.
``The Korean companies, in addition to being very strong telecom players, are also strong in all areas in consumer electronics and computing, and we also see the white goods business they are in too. So there are interesting opportunities to spread what we are doing in mobile to a broader area.''
Jacobs took over as CEO at Qualcomm from his father and company founder, Irwin, in 2005, and also succeeded him as chairman following a board vote in March.
The 46-year-old, who holds a Ph.D. in electrical engineering and computer science, joined Qualcomm in 1990, and was critically involved in the development of the company's MediaFLO data transmission technology and the BREW mobile application platform.
Qualcomm emerged as arguably the most influential company in wireless technology today, with its code division multiple access (CDMA) technology used in virtually all of the world's 3G networks in some form, allowing the company to sit on a lucrative pile of profit from patent royalties and CDMA chip sales.
It's unlikely that Qualcomm will be permitted a licensing command to that degree in the 4G era, which will be defined in large part by the standard wars between Long Term Evolution (LTE) and mobile WiMAX.
However, Jacobs is confident about the company's patent portfolio in orthogonal frequency division multiple access (OFDMA), considered a main 4G technology that is used by both LTE and WiMAX for downlinks.
And after canceling its own 4G system, dubbed as ``Ultra-mobile Broadband (UMB)'' last year, Qualcomm is now fully focused on gaining dominance in the LTE development field. It's not a difficult transition, Jacobs said, as both UMB and LTE technologies are based on Qualcomm's early CDMA patents.
``We have worked on OFDMA a lot, although it wasn't something that was widely publicized until we purchased Flarion (in 2005),'' Jacobs said.
``As we do new licenses with companies or renegotiate with companies, we are focused on getting OFDMA licensing done as with CDMA licenses, which was also part of the Nokia deal. From the chipset standpoint, we will have multimode chips, and from the technology standpoint, LTE is actually the largest research program in the company right now.''
Qualcomm has clearly benefited from its synergies with Korean electronics giants such as Samsung and LG, providing the powerful chipsets that allowed the Koreans to sophisticate their phones and eventually grab a premium slice of the world market.
Qualcomm's business with Korean companies now accounts for more than 30 percent of the company's revenue, officials said.
``We will see a broader relationship across more companies, with the computer parts interacting with mobile and consumer electronics parts, and deployment of wide-area technologies, local area technologies, peer-to-peer technologies and so forth,'' Jacobs said.
He isn't losing any sleep over the recent efforts by Samsung and LG to develop their own 4G chipsets, which are seen by many as attempts to gain an edge in their future negotiations with Qualcomm.
``We always take (such moves) seriously, but they also built 3G chipsets too ― the issue there is you need full integration capabilities,'' Jacobs said.
``They will always need to feel they have enough power in the relationship, and we need to make sure we have a balance. They do things even today, such as looking at other people's chipsets or developing their own chipsets, but those processes are the normal ebb and flow of a relationship.''
Qualcomm is looking to expand its relationship within the Korean industry beyond the electronics field, searching for strategic investment opportunities through Qualcomm Ventures, its venture capital arm that invests within a range of $1 to $10 million per project.
Qualcomm is currently sorting through Korean technology firms with the Korea Trade Investment Promotion Agency (KOTRA). Although the candidates have yet to be lined up, Jacobs said his company is looking closely at companies in wireless healthcare, devoted to developing technologies for non-invasive sensors and other advanced devices and solutions.
However, unlike the claims of some overeager Korean policymakers, Qualcomm has no plans to establish a research and development (R&D) center in Korea.
``I wouldn't say right now we are going to build a building and put a bunch of Ph.Ds in there or something like that. We intend to build our R&D capabilities in a more organic way, or maybe we will do an acquisition,'' said Jacobs, who points out that Qualcomm is already employing a lot of engineers in Korea to support local partners.
``There was a period of time when Korea was focused on its own markets, we had things like WIPI, which is now gone, and WiBro, a result of a very big push by the government. What happened then is the development community in Korea was focused on standards that were not global standards, and it helps that these kinds of pressures are not there now.''
Between New Allies and Foes
The advancement in wireless technology is transforming both the devices and the companies that are making them, Jacobs said, and as a result, chipmakers that were previously separated are now coming to blows as the market barriers dissolve.
According to Jacobs, wireless connectivity will be required in virtually every device, whether in handsets, computers and consumer electronic products, something that could happen as quickly as in the next two to three years.
And Qualcomm's superiority in mobile and its broad technology coverage puts it in a good position to exploit the evolving market, and also in an inevitable collision course with Intel, the dominant chipmaker for personal computers (PCs), he said.
Qualcomm's new microprocessor chip, Snapdragon, embodies the company's ambitions for computer chips. Snapdragon, targeted for smart phones, laptops and other mobile Internet devices, guzzles less power than similar chips by Intel.
Toshiba, the Japanese electronics maker, recently introduced a smart phone using a Snapdragon chip, while Taiwan's Wistron showcased a Snapdragon ``netbook,'' or book-sized laptop.
Qualcomm said interest in the chip is also ``very high'' among Korean electronics makers.
Snapdragon represents the changing of rules of the game in computing, Jacobs said.
The emerging demand for ``always-on'' portable Internet devices means that computing speed, which had been the source of Intel's competitiveness, is becoming a lesser factor than power efficiency.
This provides an environment where Qualcomm could excel, as it has been building its reputation on chips for mobile phones, while Intel has to figure out how to make its chips flex their muscle without killing too much battery life.
``The interesting dynamic in the industry right now is that the manufacturers are looking for a company that can provide a credible alternative to Intel on the microprocessor side and it's clearly us,'' Jacobs said.
``They are trying to come down from above to reduce power consumption and build a low-power processor, while bringing along the whole Wintel application developer community. We are trying to come up from the phone and focus on Linux, Android and these kind of operating systems and get our software good.''
Jacobs believes that mobile Internet devices will be all about instant connectivity, which is not how conventional computers work today.
``When you close your laptop now, it goes off, but when your phone goes down, it is actually still on the network _ my Blackberry is gathering e-mail even when I am not using it. I think mobile computing devices will become much more like that,'' Jacobs said.
``So I argue whether their (Intel) software is the right software to come down with, as the devices are going to be completely different. Certainly, their power consumption is not the right power consumption.''
It seems as if, just overnight, Qualcomm gained a difficult industry foe in Intel and lost another one in Nokia, the world's biggest handset provider.
Since settling their multi-year dispute over patent royalties last July, Qualcomm and Nokia have been showing impressive teamwork, surprising the industry last month by announcing plans to jointly develop smart phones for the North American market.
And with Qualcomm recently settling a separate legal feud with Broadcom, agreeing to pay its chip rival $891 million to end patent litigation, the company is free from technology disputes for the first time in many years.
``We had the best wireless engineers in the world spending their time doing work-arounds, so that companies like Samsung and LG could continue to ship their products. So these people being back to focusing on new technologies will really generate value for us,'' Jacobs said.
``Nokia was our competitor before, but now we are partners. The relationship is not comparable to what we have now with Samsung and LG, but in the future, we want to be more like that.''
Augmented Reality
Amid the current economy, Jacobs sees the market for high-end phones as strong, with people buying more smart-phones, and also an emergence of the low-end segment, with the mid-tier market squeezed out. This has the company hedging its bets in research and development.
``It used to be you just invest in the high-end and the features will trickle down to the low end. Now, we are investing in the high end of new features, but we are also investing very heavily at the low end for integration, so that you can get a phone onto essentially one chip,'' Jacobs said.
``(For example) someone just brought me a phone module that is a complete phone, but less than the size of a quarter. When you can integrate that much, you are able to build a very low cost phone, even with a lot of capability on it.''
Another important development Jacobs sees is the increasing number of networks, applications and functionalities that are running in the ``cloud,'' which may lead to a vastly different mobile computing experience compared to that of today.
``The cloud computing era is not going to be just about what you have on your PC, it's going to be something that comes out to the real world,'' Jacobs said.
``Today, being online means I am sitting in front of my computer. But we will see netbooks coming out that will be always connected, always synchronized with all of your social networking along with your e-mail and contacts calendar, and also have location-based services on it.
``What social networking in the future may be is not that I am sitting in front of my Facebook now, but that I am nearby you and we can meet actually physically, or things like that.''
The shaping of this new wireless environment, combined with the capabilities that are in the phone, has Qualcomm developing technologies for an innovative concept it calls ``augmented reality,'' which sounds like an always-on, mobile version of local search.
For example, a person walks down a street with his camera-equipped handset. Hold up the phone and the screen will have names or business cards floating above the heads of pedestrians, and have advertisements and menus appear next to restaurants.
Qualcomm researchers are currently developing a technology that put images on buildings and other objects when the owner holds the handset up.
``Imagine walking down the street, and seeing where my friends have taken pictures and left them somewhere for others to see. I walk pass the spot and a little thing that flashes and says `look here, somebody has left something behind for you,''' Jacobs said.
``This kind of a cloud, the combination of storage in the network and the capabilities of the phone, brought to me in a new way that I can see it, will have the virtual world actually merge with the real world through the screen. This could be a very exciting possibility and we are working on it.''