According to IDC, sales of smartphones are expected to grow 39% world-wide this year from 2010 to 421 million units. More than 40% of those devices will run on operating systems developed within 10 miles of each other in Silicon Valley.The article by veteran tech reporter Yukair Iwatani Kane presented a oversimplified and distorted version of the US wireless industry. It played up Sony Ericsson — the has-been cellphone marker in 2010 to 6th in global market share and off the map in smartphones. It never mentioned chips at all — nor Qualcomm, the largest cellphone chip maker or its San Diego hometown.
However, Kane can’t be held responsible for the most glaring error, that of the headline: the iPhone, its OS and app store are developed and run in the 408 area code.
This of course is about the secular shift in cellphones: it’s not about the radios and networks, it’s about the software, platform, application and the Internet. (Intel’s dreams notwithstanding, the chips are all ARM licensees which means Qualcomm must fight relentlessly to gain and maintain market share.)
If the fight is over software, then San Diego will play a decreasing role in the growth of the wireless industry. When I helped start the SDSIC in 1993, we were concerned about the region’s ability to support local software companies, and modeled some of our practices after Silicon Valley forebears. Despite our hopes, the region’s software industry never grew all that much — certainly trailing Silicon Valley, Seattle and several other cities.
UCSD and Qualcomm alumni are starting firms, but the software engineering and VC talent will remain concentrated elsewhere in the state.
Qualcomm itself would rather switch than fight. Under Jacos fils, it’s become less interested in San Diego and is expanding in the Bay Area to get local design wins and tap its software and Internet expertise.