Friday, December 18, 2009

Qualcomm: beyond the cellphone

CEO Paul Jacobs and two of his top executives were on stage Wednesday for the annual San Diego Telecom Council CommNexus “Qualcomm Town Hall”. Deutsche Bank analyst Brian Modoff pitched his own questions, as well as ones texted to him by audience members.

Bruce Bigelow covered the story for Xconomy San Diego. (At the reception beforehand, I chatted with Bruce — we’d never met although I’d traded emails with him when he was at the U-T.)

Bruce’s story focuses on one of the major themes for Qualcomm nowadays, which is the ongoing shift from voice to data. He emphasizes discussion of 4G deployment, although the 4G questions were all about LTE (particularly Verizon’s rollout starting next year) rather than WiMax. And indeed, looking at my notes, 4G/LTE was one of the major topics of the evening.

As Bruce notes, Jacobs noted that the 4G rollout will happen over time. One question relayed by Modoff: analysts are asking was when will there be single mode LTE devices? The answer was that there will be multimode devices as long as analysts have a job on Wall Street — and Jacobs added “hopefully that's not because they have a short career.” Jacobs also talked about limited prospects for improving spectral efficiency with 4G, something he and his dad had discussed in their rare joint keynote at CTIA in October (also held here in San Diego).

Still, in listening to Jacobs talk, I found at least one answer to my longstanding question: how will Paul be different than Irwin?

The short answer: Irwin is about radio and Paul is about mobile computing.

Yes, Irwin was UCSD’s most computing-oriented professor at the APIS department back in the 1960s — to the point that the department chair despaired of losing him when he left on leave in 1971 to take charge of Linkabit. However, Irwin’s publications and influence were as a popularizer and entrepreneur for Shannon theory, including his greatest career accomplishment — turning CDMA into a business.

And certainly Paul has his Berkeley EE PhD and can talk spectral efficiency with the best of them. But his career and his passion seems to be as a device geek, and Wednesday’s session seemed to emphasize that he is taking Qualcomm not just beyond voice, but also beyond the cellphone. (Of course, he was also born into the software/microcoding era, and has fully internalized software-based device design to a degree that perhaps Dad never could).
Indeed, the idea of Qualcomm beyond cellphones was a recurring theme during the executive Q&A. Beyond LTE, two other topics that came up over and over were the Snapdragon chip and the FLO TV 700 Mhz broadcast television service.

Prompted by Modoff, QCT president Steve Mollenkopf kept coming back to Snapdragon over and over again. It’s not clear how clear how successful the Qualcomm ARM cpu/communications chip will be, but it was very clear that pushing Snapdragon is one of Qualcomm’s major strategic thrusts for 2010 as it moves into mobile devices such as “smartbooks”.

Mollenkopf was asked to compare Snapdragon vs. Intel’s Atom. He made it clear that they’re in different niches now, but eventually the two products (and presumably companies) will be directly competing. Indeed, it’s hard to imagine how the Snapdragon smartbook will be distinct from an Atom netbook in 2011 or 2012 — other than the choice of operating system (Android or perhaps Windows CE vs. genuine Windows).

The other non-cellphone device that came up was the Personal TV portable device that Qualcomm is selling to promote use of FLO TV in the US. COO Len Lauer pulled it out more than once — and also mentioned that it was available at Best Buy, Amazon and Radio Shack. His ongoing plugs for the PTV became a sort of running joke for the evening.

It was not clear where the PTV is an attempt to bypass cellphones to win FLO TV adoption, or merely to create a buzz and urgency while waiting for cellphone makers and the Big Two (AT&T and Verizon) to more enthusiastically promote the service.

While they are less about radios and more about mobile devices, the PTV and Snapdragon also reinforce an existing Qualcomm strength dating back to Irwin (and Andy Viterbi’s) earlier company: Linkabit. It is clear that Qualcomm was born (and remains) a systems company, designing things from end to end rather than individual components. Yes, it may partner for other pieces of the value chain, but it can also bring products to market if that’s what it takes (CDMA cellphones, the PTV).

I think this is one area where Qualcomm is quite different than Intel: it is and has always been a systems company, while Intel has spent 30+ years seeking R&D and scale economies from high-volume semiconductor manufacturing. Given their complementary strengths, and overlapping customer base they could conceivably work together.

However, given their size and corporate egos, I think the two companies are destined to remain more competitors than coopetitors. To Qualcomm’s credit, its relations with the third titan in this segment (Nokia) are somewhat better than Intel’s.

Personal note: This was the first time I’ve attended an evening event in San Diego and then flown home afterwards. At the Southwest terminal in Lindbergh, I was relieved to see Modoff and an associate also there after the talk, catching a 9pm flight to SFO as I caught a flight to SJC.

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