Qualcomm, the world’s largest provider of wireless chipset and software technology, made its reputation and fortune by commercializing CDMA—code division multiple access, a digital technology that allows different transmissions to share one cellular network. CDMA was the foundation of both the second and third generations of mobile communications; the standard is used by 308 mobile carriers in 116 countries. But as the wireless industry begins rolling out fourth-generation networks and new mobile devices such as tablet computers, Qualcomm must help its customers, the large wireless-device manufacturers and mobile carriers, create very different products and services, often in new markets like China, India, and Africa. Jason Pontin, Technology Review’s editor in chief, spoke to Irwin Jacobs, 77, who founded Qualcomm in 1985 and served as the company’s chief executive until 2005 and its chairman until 2009.
Technology Review: Qualcomm is celebrating its 25th anniversary. How many times have you had to reinvent the company, and what did you learn?
Irwin Jacobs: I wouldn’t say we ever “invented” the company other than when we began. When we started Qualcomm, we didn’t have a specific product in mind, and we didn’t have a business plan. But we knew that wireless and digital would be of interest and that we would try to be innovative. It was in the first several months that we came up with some ideas, including CDMA, which have kept us busy ever since.
CDMA has been the backbone of your business for many years. Surely the company is being forced to reinvent itself now, as the world moves toward the fourth generation of wireless standards, which tend to supplant CDMA.
Again, I wouldn’t call it “reinvention.” We continue to evolve as the technology evolves. Of course, CDMA is the basis for all third-generation technology; I’m sure it will be here for at least another decade of very active use. Going forward, we’ll see which directions are going to be important technically to the industry. We listen to our experienced customers and then do a lot of R&D so that we can make them aware of what is doable. And then we’ll do what is always done: try to run real fast and to innovate.
Then please describe some of the future platforms and the opportunities that you believe will be particularly important for Qualcomm.
Right now, 3G is still expanding rapidly. China issued its 3G licenses going on two years ago. Similarly, in India they just gave away their 3G and 4G licenses. There’ll be considerable growth there. Over this next five-year period— in fact, perhaps even the next decade—we’ll see mobile devices evolve, and the technology itself will become more of a mix of what’s been referred to as OFDMA [orthogonal frequency-division multiple access, a 4G technology] along with CDMA.
Like you, I’ve traveled in the developing and poor parts of the world. I’ve seen India and China and parts of Africa entirely transformed by mobile technologies. These regions seem to be leapfrogging the wire-bound infrastructure of industrialized nations. Yet cell phones remain out of reach for the bottom billion people in the world. What can be done to drive down the costs of wireless and mobile technologies?
I certainly agree with your observation. There are estimated to be five billion mobile phones on the planet. The technology has really spread very rapidly. Why? Consider, as an example, India. Before CDMA was accepted, the government limited mobile telephony to the use of GSM [global system for mobile communications, a standard that competes with CDMA], and prices were very high both for the devices and for the service. So there was a very low usage of mobile telephony. Finally the Ministry of Communications decided to issue a single license and not specify the technology for 2G, and CDMA began to compete. It was at that point, with competition driving down the price of the devices and the service, and [mobile] operators learning how to operate with very low cost, low revenues per user, that mobile communications expanded throughout the Indian population. So the first thing is: competition is key.
As for the devices themselves … Well, a few years back, I made what I thought was a wild-eyed estimate that at some point in a few years phones would get down to a wholesale price of $100. Well, now in India the wholesale price is a little bit above $20. Part of that is because we do a lot of development work on the innards of the phone. Almost all of the digital capabilities of a phone are now contained on a single chip, and more and more we’re packaging in that chip the power-support components. So you can build a phone with very few components; that allows you to bring the wholesale cost down. With Moore’s law still applying for several more generations, I would expect to see the costs of devices continuing to come down a bit further, although they are getting quite low.
Another explanation of the growth of mobile technologies in the developing world is the usefulness of the phones to people who may in fact be illiterate. We’ve set up efforts to help fishermen in one case, and in another project we’re helping farmers—providing a variety of information over their phones. In the example of the fishermen, we tell them what price they might expect in different ports, reducing the importance of middlemen. Or we tell them about the weather; that’s turned out to be so successful that now it’s becoming a commercial service. One of the things I’m hoping is that as fishermen and farmers experience the value of receiving information largely by voice or diagrams over the phone, they’ll be motivated to become literate.
Qualcomm provided Google with the Snapdragon chip, to launch a phone that didn’t require contracts with carriers. The business model didn’t work. Why not? What other models might reduce the heavy weight the carriers exert upon innovation?
Google didn’t press it very hard because they were then competing with other manufacturers who were making Android phones. And so between not being marketed actively and having more limited distribution and support, that model did not work. But there are certainly situations where you can buy phones retail and then sign up with an operator for the service. We’ll see how that develops. There are also other models such as the one that Kindle started, and others have followed, where when you order a book using your Kindle, the information goes out over a cellular network, the book comes back over a cellular network, but you don’t pay separately for it—it’s just buried in the price of the book. We’ll see a number of different business models, driven by competition, driven by the various applications.
What can the wireless industry do to keep up with and manage the unprecedented demands being placed on the network by the growth of mobile video?
The interest of subscribers in video became apparent in South Korea when we first launched some of the 3G services. Video on phones is just going to continue to increase. I don’t think users are going to broadcast so much as want video on demand. And that does load the network down quite a bit. That’s the reason we developed our MediaFLO technology [a service from Qualcomm that lets mobile carriers stream videos on cell phones]: we wanted a separate frequency band to provide a forward link that carries the videos to the phone. I suspect that additional forward-link-capacity spectrum will be made available and used to support video. The other way one gets spectrum is by having additional base stations. What we’ll see is the network evolving to have more and more access points. Some may be in your home. But the spectrum’s limited, so we’ll have to do things such as reuse the same spectrum.
The mobile market is by no means now limited just to phones. How will Qualcomm change as tablets and other devices become increasingly common?
The key issue with these new devices will be that they’ll need chips that use very little energy and provide a lot of computing power. We recognized this early on, and we set up a whole group to research the problem. That’s where Snapdragon came from. Those chips were initially only in phones but are now moving up into other devices. This is an important area for Qualcomm, because I believe that tablets will probably become the major computing devices for most people.
Augmented reality has been a significant investment for Qualcomm. Why do you think that augmented reality will be such an important function on our mobile devices?
There are lots of interesting new capabilities. Say I’m in a foreign country: there’s a street sign I can’t read, so I hold up my phone, and it translates the sign for me. We’re beginning to see other examples show up. You might do product comparisons in a shop. You could locate friends who are willing to be located when you approach an area. Since my memory is not as good as it once was, particularly for faces, one I like very much is the possibility of a phone’s camera seeing a face and whispering in my ear who that person is.
It changes the way we respond to the world, doesn’t it, though, Dr. Jacobs? I’m outsourcing more and more parts of my cognition and my memory to the network. I no longer try to remember various things. I haven’t memorized a telephone number in years. My child will memorize less.
I know that some people do worry about this issue of outsourcing, as you put it, but I myself think it’s going to be a great benefit to most of us. Take your child: his breadth of knowledge with this augmented memory capability will be that much more than yours is now.