A nice little right-up on Dr. J from www.sunday-times.co.uk
Mobile-phone prophet lets America catch up
THREE YEARS AGO Irwin Jacobs, a former university professor and Qualcomm's chief executive, looked like a man on the edge of a cliff.
He had staked his scientific reputation and seven years of his life to persuade the American telecommunications industry that Qualcomm's cellphone technology was the best in the world.
America's telephone giants eventually bought his argument and invested billions of dollars in the technology, called CDMA. But after years of glitches and delays his clients were beginning to wonder if CDMA would ever deliver the results Jacobs had promised.
The Wall Street Journal, in a wounding 1996 critique, suggested he was a better salesman than scientist. It said CDMA, which stands for code division multiple access, was dividing and confusing the American market and giving the lead in cellular technology to Europe, where 10 times as many digital phones were being used at that time (16m against 1.5m).
But today Jacobs looks like a vindicated prophet. A new survey by Dataquest reveals that CDMA telephones now outsell all other cellphones in America. The world's wireless operators and equipment manufacturers have belatedly agreed to use CDMA in a new global standard for mobile phones.
Qualcomm's shares, which had been flat for years, have tripled in value since January. Jacobs' 4.5% stake in the company is now worth almost $1 billion.
He says: "When we started it was a difficult thing coming from university into business. It was hard to make people believe that we knew what we were doing."
But there was really nothing surprising about his success. Before setting up Qualcomm he and two other university professors had started another company, Linkabit, which specialised in defence projects, made big profits and fathered half-a-dozen successful spin-offs.
"I knew nothing about management," he says, referring to the beginnings of Linkabit. "I got hold of some oganisational charts from different companies and then tried to find jobs for people to fill. I learnt about accounting and documentation as I went along. But as a trained engineer I think I had a lot of the skills you need in business. You know how to evaluate a business plan, the risks and the possibilities."
Linkabit developed VSET (very small earth terminal) for the military and then adapted it for commercial use by shops to check the creditworthiness of credit-card payers. Another Linkabit product was a widely used cable-television scrambling system.
When Jacobs decided to sell the company and retire (on April Fools' Day, 1985) he received $25m for his Linkabit stake. Retirement lasted precisely three months. Then he and his two professor friends set up Qualcomm. "I was looking for fun and wanted to do something productive. Retirement had proved a bore," he says.
This time the financiers needed no convincing that Jacobs and his friends were bankable. "We started the company with our own money," he says. "But when we did go out and ask for money, Goldman Sachs bought the entire first offer for its own directors' funds."
CDMA, the technology on which Qualcomm is betting so much of its future, has a colourful past. The original patent for the concept was taken out by Hedy Lamarr, the 1930s and 1940s film actress. Despite her famous quip, "Any girl can be glamorous: all you have to do is stand still and look stupid", Qualcomm engineeers are convinced she was one of Hollywood's brightest stars.
Lamarr got her inspiration for the patent from the player piano, which plays itself with the aid of perforated paper rolls of coded musical notes.
She felt that a similar coded system could be used for recording and transmitting voice messages. Her logic was sound but it took almost half a century and the invention of modern computers to make it practical. By then Lamarr had died and the patent had expired.
Jacobs introduced a commercial version of CDMA to the telecoms industry in 1989, just a few months after the industry had adopted a rival standard called TDMA. He claimed CDMA had 20 to 40 times the capacity of traditional analogue cellphones and about 10 times the capacity of TDMA.
But proving he was right was not easy. Targets for completing the technology were repeatedly missed and by the time he had convinced most American companies to accept CDMA Europe was committed to a third standard, called GSM.
Never one to duck a fight, Jacobs demanded that the Europeans let him into their market. He enlisted the help of Madeleine Albright, secretary of state, and other senior American officials, who threatened trade sanctions if Qualcomm was excluded from Europe.
Last March Ericsson, the Swedish phone giant, which had been leading the battle against Qualcomm and was about to go to trial over mutual patent infringements, made a surprise out-of-court settlement. It agreed to buy Qualcomm's money-losing wireless infrastructure business and to share its patents and markets.
Jacobs admits it has been a hard slog. But he thinks it is much easier for academics to start their own business than it used to be.
"It was a novelty for academics to get into business when we started," he says. "But it isn't any more. Even in Britain professors at Cambridge University are finding they can do it."
This is true. But how many will be billionaires? |
