Qualcomm's strategy towards a trillion connected devices"¨

Nathan Burley/Ovum
13 Aug 2008
00:00

The vision in which everything is connected is not new, but at its recent analyst event Qualcomm showed its intention to drive the market and take advantage of the opportunities that connected devices present. It expects numerous new mobile device categories and specialized devices, many based exclusively on data, to be built on its platforms.

It is clear that ubiquitous broadband accessible at low costs (both device and data) creates numerous new opportunities and business models. One such opportunity is connecting the many unconnected consumer electronics products. Examples which have already emerged include the wirelessly enabled e-reader, the Amazon Kindle, and connected personal navigation devices (PNDs). We have also seen devices for machine-to-machine and remote monitoring applications achieve some traction.

However, according to Qualcomm, when it comes to devices and usage cases enabled by ubiquitous broadband, we are still only in the stage of innovation and early adoption. It expects a chasm to be crossed after which opportunities will explode, enabling a vast array of new customers and participants in the mobile industry, while also providing a new growth area for Qualcomm's business.

Rather than focusing on handsets and just offering cellular radio modules for consumer electronics manufacturers to embed in existing solutions, Qualcomm's strategy is to convince manufacturers to design products predominately on Qualcomm chips. It believes the mobile industry's scale and subsequent R&D investment will slowly make other silicon providers less competitive. Even without the advantages of integrated cellular connectivity, Qualcomm would expect more non-handset electronics devices to be built on ‾phone‾ chips.

In new, larger-screen device segments, commonly referred to as mobile Internet devices (MIDs), Qualcomm defines categories such as pocketable computing devices (PCDs), which are devices with displays of 4‾6 inches, and mobile computing devices (MCDs), which have displays of up to 12 inches. Qualcomm believes its competitive advantage over players such as Intel will be its ability to support always-on, instant-on, long battery life and integrated wireless support. Qualcomm has specifically developed a scaled-up chip called Snapdragon to address these segments.

Qualcomm believes that although these new segments have achieved limited traction to date the market will see significant growth. Amongst other advances, increases in processing power at lower power consumption, affordability of solid state memory and wireless network advancements have made these devices more useable and affordable. In addition, user demand for connectivity and behavior changes around mobile Internet are creating new usage scenarios. Our view is that these new devices are currently driven almost exclusively by suppliers, rather than user demand. No doubt niches will exist, but without a specific purpose, such as gaming, we are cautious about the market size for devices which are too big to be pocketable yet smaller than a laptop and have to be carried in a bag anyway.

Qualcomm also believes PCDs could function as a hub for user content storage and replace PCs in a docking-station environment. We are skeptical about both of these scenarios.

In connecting the more traditional laptop market, Qualcomm's positioning is around its Gobi platform, a multi-standard connection module which has achieved a number of design wins. Although laptops will inevitably include mobile connectivity at some point, there are still barriers to embedded adoption and our forecasts show this market will take time to ramp.

Nathan Burley, Analyst

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