Qualcomm plans to design chips for low-end smartphones [Strategy] [Times of India]
(Times of India Via Acquire Media NewsEdge) In Corporate America, Paul Jacobs is a rare businessman -- he succeeded his father as CEO. His father, Irwin Mark Jacobs, the founder of wireless technology company Qualcomm, handed over the reins to him in 2005 and almost simultaneously, Paul broke away from the past and gave it a new vision.
Over time, the San Diego-based Qualcomm emerged as one of the largest mobile technology companies, counting most handset manufacturers as its clients. But it was really Paul who took the $19-billion Qualcomm -- which was focused on CDMA -- to 3G and LTE and then expanded it beyond mobile communications to mobile computing and connectivity.
When 50-year-old Paul, sat down for a chat with us recently at a Gurgaon hotel, he agreed that such cases of succession are indeed rare. "It was right timing. I had worked in the company and my father's previous company when I was young... The transition from my father to me happened around the time of inflexion ... (pause) ... 2005, yes, it was the coming of data services," says the tall and soft-spoken man, who is an engineer by training, just like his father.
Paul credits his success to his father's mindset of completely stepping back and giving him a free hand to drive the company. Cut to the present: He is happy enabling better access to government services in Brazil, helping fishermen in Kerala, providing access to healthcare and detecting voter fraud using technology. His mission is to improve quality of life across the globe. He also appears excited about the opportunity to transform lives and bridge the digital divide across the world. "Telecommunications is humanity's biggest platform. More people have access to a cellphone than toothbrushes," says Paul, who has 40 patents to his credit for his inventions in wireless technology and devices.
Outlining his vision for the future, Paul, who has a doctorate degree from the University of California, Berkeley , says the company has set itself a goal called '1000X'.
"What that means is that we want to increase the capacity of networks by 1,000 times. If we can increase the capacity of the networks by a 1,000 times, we are also going to reduce the cost of providing that connection by roughly a 1,000 times and that's our goal. And that will mean that everybody will have access to pretty much all the data they want," he says, adding that Qualcomm has started talks so that operators in India can adopt these technologies.
In India, Qualcomm has development facilities for software and chip design and works with telecom operators and local manufacturers to build the ecosystem around telecom. The company, which bagged four circles in the BWA spectrum bid to deploy LTE technology for 4G services, ran into some regulatory trouble later over timelines.
It was also threatened with cancellation of the award. The worst is behind it and in May 2012 it partnered with Bharti, offloading a 49% stake.
For Qualcomm, it's just a market-building model as it usually never works as an operator. When quizzed how difficult it is to do business in India, he says he resents the fact that there is a constant change in the regulatory environment, making it tougher for businesses. He stressed on clarity to enable companies to plan their investments.
"We paid a billion dollars for spectrum and we weren't even sure whether we were going to get it. So that was a difficult period for us. Did it make us say we are not going to do business in India No. We understand India is a big market and we have to be here. But certainly it made us say we need to think very carefully the next time we make an investment to make sure it's going to turn out the way we expect."
So, though he has several plans for India, currently he is on a wait-and-watch mode to see how the situation in the telecom sector pans out. "I think right now in India there is just so much turmoil it is hard to break through it. My hope is that things will calm down."
He feels consistency is not only an India-specific issue as most countries use telecom as a revenue generation tool. But what stops the company from launching a phone, which vaulted both the image of Apple and its share price
Especially since a large part of Qualcomm's technology finds its place in smartphones these days. "It's a very high risk business. The margins, until Apple came in, weren't that good... It's not clear that others can replicate that position. And I actually believe that it is worth focusing on the things that you do very well... And it's good to partner."
Asked to comment on the future of PCs versus wireless, he casually puts his weight behind phones. "It will be very unlike the PCs people use today. It might look a little bit like it but the way it works would be more like a smartphone." He is also quite bullish about 4G adoption in India despite higher costs and says availability of cheaper smartphones at sub-Rs 5,000 will enable faster adoption of cutting edge mobile technology.
In light of the plan, Qualcomm now plans to design chips for smartphones at the low end. "We won't get Rs 2,500 smartphones with all the bells and whistles in it right away... That's a goal which is a little farther," he says on a parting note.
(c) 2012 Bennett, Coleman & Company Limited
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