Qualcomm Executives Look for Industry Rebound Next Summer

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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