Qualcomm Executives Look for Industry Rebound Next Summer

12/10/08Follow @bvbigelow

The economic downturn means it’s likely the wireless industry will stay with third-generation, or 3G, technologies for the foreseeable future, Qualcomm’s top executives said last night during a panel discussion.

Qualcomm CEO Paul Jacobs said customers of the San Diego wireless giant have pushed out their chip orders for 3G technologies because of the economic downturn, but the company is looking for a business rebound in the second half of 2009. He cited the “uncertainty of consumer demand” as a key underlying issue, but Jacobs also noted that sales of 3G handsets based on Qualcomm technology have increased 25 percent over last year.

The panel discussion at Qualcomm’s corporate headquarters, in the 534-seat Irwin M. Jacobs Qualcomm Hall, was billed as a “town hall” meeting by CommNexus, the San Diego telecom industry association that organized the event. “It’s meant to disseminate ideas, share knowledge, and build networks with industry peers,” CommNexus CEO Rory Moore told the audience.

Jacobs, who was named as Qualcomm CEO in 2005, is the son of Qualcomm founder and chairman Irwin Jacobs. The second-generation CEO was joined by his second-in-command, former Sprint executive Len Lauer, who was named as Qualcomm COO in August, and by Steve Mollenkopf, who also was named in August to head the all-important QCT, Qualcomm CDMA Technologies.

So in a way, the event featured the 2.5G version of Qualcomm management discussing 3G technologies and the prospects for 4G products and services.

But for all the discussion about digital wireless technology, the Qualcomm chips in the Blackberry Storm and Qualcomm software in Google’s Android operating system, about USB dongles, and LTE versus WiMax, what may have been the most interesting question didn’t come until the end.

“What do people misunderstand about Qualcomm?” asked Iain Gillott, the wireless industry expert who was recruited as moderator for event.

“From a PR point of view, I think the way we are most misunderstood is from the newspaper headlines and everyone attacking our licensing model,” said Lauer, referring to industry complaints about the high cost of Qualcomm’s licensing deals. “What they miss underneath that is all of the innovation and research and development we do… opening mobile radios to new apps and services.”

CEO Jacobs added that because of Qualcomm’s patent lawsuits against Nokia and Broadcom, “You think this is a litigious company, but we did not go out and sue everyone first… Our (business) model is built around licensing. We have one of the broadest models. We don’t sell cell phones to end users. We work with partners. We consciously developed this strategy of working through partners and we go to our partners and say we’re here to be a good partner with you.”

It was an interesting moment of executive self-reflection, especially since a federal appellate court last week upheld most of a lower court’s findings against Qualcomm in a patent dispute dating to 2003. The court found substantial evidence that Qualcomm had deliberately withheld its proprietary video compression technology from a standard-setting industry group, a move that left room for Qualcomm to later file a patent-infringement lawsuit against Broadcom, a rival chipmaker in Irvine, CA.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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  • Abner Tripleday

    It’s too bad writer Bigelow is unable to get to the heart of matters with Broadcom. Instead he scrabbles on the surface, involved with the shallow headlines of court failures generated by the lack of integrity and the ineptitude of the dismissed former Qualcomm legal department chief, Mr. Lou Lupin. Too bad Paul Jacobs didn’t recognize that situation in time, or understand his responsibilities when he was head of Qualcomm Digital Cinema, but that tarnish is superficial in the light of Qualcomm’s contributions to this enormous and important industry.

    The core realities of Broadcom are reflected in the depravities and conniving revealed about it’s founders this past year. Heck of a legal department though.

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  • andy evan

    Issues with litigation and IP are just the result of a patent system thats plays into the hands of any company with enough laywers to turn it into a business.
    Companies with cash patent anything standing with as wide patents as possible, then they use these in court (whether they eventually stand up or not) to tie up competitors and limit their ability to go to market and compete with them.
    Alternatively a small company (or individual) patents an idea and a big company just copies it. That big company knows that it can buy more time in court and probably will just kill the small company in litigation. If the big company thinks it will lose it just settles out of court and pays for the technology, which it would have had to anyway if it played straight. So they can’t lose.
    Thats the way business is played and you can’t blame companies for doing it. Unless theres some way to change the regulations they will keep doing it.
    While you can still patent obviously darwinian things like one click purchase on the web this is going to continue.