In Challenge for Emerging Netbook Market, Qualcomm Moves From Smart Phones to Smartbooks

9/8/09Follow @bvbigelow

As interest builds in the coming introduction of new wireless netbooks, Qualcomm CEO Paul Jacobs tells the San Diego Union-Tribune that many netbooks based on Qualcomm’s Snapdragon processor also will include Qualcomm’s MediaFLO, the company’s satellite-based TV broadcast for mobile devices.

In an interview with the newspaper’s editorial board, Jacobs says the new line of netbooks—which he calls “smartbooks”—will use MediaFLO technology so users can watch live events and FloTV programming transmitted directly to their display screens. But the technology also will be used to rapidly broadcast and store Internet content. Qualcomm calls it “data casting,” Jacobs says. “That’s sending snippets of data down, so headlines, weather, sports, stock quotes — whatever you might be interested in — we are looking at broadcasting that down to the device. So when you open it up, there’s already live data on it. I think that will be pretty compelling.”

Paul Jacobs

Paul Jacobs

The next three months should tell whether Jacobs is right, but we should expect a few more surprises by the time the Christmas shopping season begins in earnest.

In June, Collins Stewart analyst Ashok Kumar said Hewlett-Packard plans to launch a line of netbooks before the year ends that will be powered by Qualcomm’s Snapdragon processors, rather than the Intel Atom processors now dominating the sector. As the world’s No. 1 desktop PC maker, HP’s decision to power its netbooks with Snapdragon chips represents a significant endorsement for Qualcomm over Intel and the line of Atom processors developed for the emerging netbook market.

Neither Qualcomm nor HP have announced the deal, but Kumar told me at the time that he’s got sources in HP’s Asian supply chain who are vouching that HP’s new netbooks will have “Qualcomm inside.”

Analysts have been closely watching the uptake of Qualcomm’s Snapdragon chipset—both for what it means for Qualcomm’s expansion into smartbooks (as opposed to netbooks) as well as the ramifications that has for Intel’s business. But in his interview with the Union-Tribune, Jacobs minimized the significance of the looming head-on competition between Qualcomm and Intel, saying, “Everybody sees it as a conflict. But it’s more ‘coop-petition’ because we work with them on this thing called Gobi, which is a way of wirelessly enabling Intel architecture.”

Yet as Jacobs pointed out, Qualcomm and Intel also are approaching the netbook/smartbook market from different directions. With its experience in developing capabilities in the wireless network, Qualcomm’s Snapdragon chip has been described as a beefed-up cell phone chip that runs at 1GHz. Snapdragon-powered smartbooks also include 3G mobile broadband, Bluetooth, and Wi-Fi capabilities. In contrast, industry watchers describe Intel as working down from high-powered processors and hard-disk storage, so Intel-based netbooks can store more data internally (as opposed to streaming it from servers in the cloud). Analyst Andrew Seybold says Intel also is counting heavily on netbooks to drive WiMAX sales for its technology allies, such as Clearwire. In short, Qualcomm is expanding from its 3G smartphones to smartbooks, while Intel’s netbook strategy is basically taking a laptop and making it smaller.

So far, Qualcomm’s smartbook rollout appears to still be on schedule. Jacobs told analysts during a July 22 conference call that Toshiba’s Snapdragon-enabled TG01, which he described as “a really high-end smartphone,” was launched in May in several markets across Europe. Qualcomm’s Snapdragon-powered “smartbook phones” will start to come out during the last three months of this year. “We still remain confident in those launches,” Jacobs said. “We do expect that market to develop over time paced primarily by how the software gets developed across the various players. There are a number of traditional software providers in the cellular space that are trying to pull that user experience up into this new class of devices.”

The primary inhibiting factor for Qualcomm’s Snapdragon-based smartbook platform is a lack of Microsoft Windows support, according to Kumar, the Collins Stewart analyst. “It’s a real Catch-22,” Kumar says. Microsoft “wants to see the sales volume before they commit.” So far, Kumar says the global netbook market is a fraction of the market for notebook PCs, with Chinese netbook makers Acer and Asus currently sharing three-fourths of the business.

“If you look out 12 months, Microsoft has said they’ll provide support for ARM (the chip technology used in Snapdragon and nearly all mobile phones) with Windows 7 Mobile Version in 2010,” Kumar says. He calls that a “halfway step in terms of eventually providing full support for ARM architecture.” If Microsoft expands its software support for ARM-based smartbooks, Kumar says it would represent a significant crack in the “Wintel alliance.”

Until Microsoft comes on board, Qualcomm’s smartbook will use Linux as its operating system. Luis Pineda, a senior vice president of marketing for Qualcomm CDMA Technologies, is on the record as saying the operating system isn’t as big a deal as having a well-designed home screen and touch screen.

Of course, it will be up to consumers to decide whether smartbooks or netbooks will become the high-end item on Christmas wish lists. But smartbooks are going to offer one arguably must-have feature that many netbooks lack—they will be “instant on,” like smartphones. Unlike netbooks running Windows XP, which requires the system to boot up, smartbooks running Qualcomm’s chipset and Linux operating systems will allow instant access to users.

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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