Qualcomm CEO Jacobs Talks Candidly About Innovation and Strategy
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sometimes strident complaints in the wireless industry about the “exorbitant” payments required to license its technology. In response to a question about Qualcomm’s patent library, with 8,900 filed and issued patents, Jacobs said, “We are much more about working with other companies in the ecosystem today…In the old days it was this religious war. But the old companies that we had this religious war with, the Nokias and Ericssons of the world, are now are partners.”
Jacobs also had interesting things to say on other subjects:
—On how Qualcomm can sustain its high profit margin, Jacobs said: “The key is to be differentiated and not commoditized. We have a large cash flow, and put billions of dollars into R&D every year. Our competitors are not able to do R&D the way we are…Over 40 percent of our R&D budget goes into things that won’t generate revenue for three or four years.”
—On Qualcomm’s corporate culture: “We have these two cultures at Qualcomm, the [business] execution culture in the chip business, and then the R&D culture. I used to say it was like the blood-brain barrier. It was very hard to get things from one side to happen on the other. With EV-DO, we were able to do that.” He was referring to “Evolution-Data Optimized,” one of two major industry standards for 3G wireless broadband, and the one that was developed primarily by Qualcomm.
—On whether Qualcomm plans to be “acquisitive” during the market downturn: “If there are opportunities to do something interesting because valuations are low…There definitely are areas where we are looking to fill in portions of our portfolio.”
—On whether he thinks the recession is going to last a long time: “Yes, although it depends on what you mean by a long time. Most people are saying one to two years, and that seems about right.” Another concern that Jacobs noted is the potential for inflation because of the tremendous amount of money that is being pumped into the economy.
—On the pluses and minuses of operating a public company, Jacobs says that as an engineer, “my fundamental passion is coming up with an idea, putting a team together, and driving toward the goal” of developing new technology. He indicated that becoming “the public face of the company,” appearing frequently on CNBC, and “personally certifying the financial results” was a minus, although he diplomatically said it was “ancillary to getting the technology out.” Along with that, Jacobs says is an apprehension that “something can happen down the line. You can have all the controls in place, and stuff is still going to happen, and you’re the one who is going to catch the heat for it.”