Subject: Notes on Qualcomm from Disruptive Innovation Conference, 11/10-12, Vancouver, Canada
Topic: The Dawn of Digital Appliances, 11/11, 1st morning session
Panel Participants: Paul Jacobs (PJ) ? President, Consumer Products, Qualcomm; Chris Rowen - President & CEO, Tensilica (they are a relatively new company that designs microprocessors for their clients based on Tensilica?s proprietary approach); Kevin Kahn ? Director, Communication Architecture, Intel
Moderator: Clayton Christensen (CC)
PJ gave a brief presentation. I have requested full-size copies of the ten slides PJ showed. I will post if and when I receive them.
Unless otherwise stated, notes are my best effort to represent what PJ said in three venues: his presentation, during the panel discussion and related q&a period, and in the impromptu q&a period after the panel discussion ended (needless to say PJ had the largest crowd around him)
I note when I am giving the comments from someone other than PJ
I have attempted to organize the notes along the lines of the topic/issue begin addressed, and not chronologically.
My ?editorial? comments are enclosed in square brackets []
Where I feel I remembered what was said pretty exactly, I enclosed those comment in single quote marks ?@?
And here?s the beef:
Clayton Christensen began the panel by saying: ?Wireless is one disruptive innovation.?
Delay in rolling out pdQ and data service is due to 1) slowness of Service Providers (SPs) to enable service and 2) some delays in finalizing development of HDR
To SPs voice is still the key revenue source; got sense the SPs are key to rolling out new products and services ? what will they enable depends on their economics.
pdQ is good enough now for downloading text from Internet; will need higher data rates for graphics. Said more sites are being tailored for the handheld wireless appliances.
Cell phones sales in 1999 are ten times (10X) the projections they made in 1991
Number of CDMA phone units shipped in 1999 is 2X the number of PCs shipped; this will increase to 3X by 2001
With this volume, application designers are developing apps for pdQs, etc.
[Implication- What does this mean for the current projections for wireless hand-held devices!]
Indicated lot?s of potential partners approaching Q, especially since HDR demo.
The emerging shift toward application service providers (ASPs) and renting the use of software vs. buying it is aligned with the expanded use of low cost handheld devices; it will help them become more useful.
Condensing technology will eventually get the program size down to what works for hand held devices, even with something like PowerPoint. He added that if PowerPoint could work on his pdQ (it is the only application he uses regularly that doesn?t), he would never carry a laptop around again.
W/ HDR, you will be able to connect directly to the net ? always on as Dr. IJ said. George Gilder was at the HDR demo and tested it in a car. He sent a post to The GTR message board. He said it works! He was very positive about Q the entire conference.
I asked about wireless loops in the office. PJ?s response: ?CDMA is perfect for the office.? He said that they will be a player in this area when the time comes. [Maybe it depends on developing different kinds of network equipment like the routers 3COM said they will have out next year?)] PJ said they already have the antennas and when they are hung above a desk the worker will actually get 2.4meg speed.
In answer to question about whom their competitors are he said TI and INTEL. Person then asked him about Cisco ? he thought for a few seconds and said, ?No, they?ll be a customer.?
Manufacturing handsets is a high volume, low margin business. To play in it you need to be big. Said that Nokia, who makes 100 million units, was not put on allocation when the parts shortages hit, but QCOM with only 10 million units was. [Put this together with Dr. IJ?s number one requirement for sale of handset division ? that QCOM?s customers are taken care of ? and it leads to a sharp narrowing of the list of potential buyers. I know who I am now betting on, but do not want to start any unsubstantiated rumors by naming names.]
PJ confirmed that the KEY to developing HDR was in splitting voice from data; it was the essential shift that was needed, and he intimated they were the only ones to make it. He confirmed that cost to update to HDR is low ? both for the handsets (can sap out the old chip for the new) and for the SP
68% of US not able to get Cable or DSL; wireless will be the answer. In rest of world it is even more tilted toward wireless. [Note ? I spoke to a later presenter from arepa.com who are involved in interactive broadband. I asked him about Dr. IJ?s comment at the webcast that HDR would not work for broadband interactive and the speaker agreed. I then asked him about the 68% figure that cannot get cable service and he said that will begin to change starting within a few months with new cable technology that will soon be available. I then asked about the cost of wiring to each home and he said, ?Oh, HDR could work for broadband interactive for the last mile.?
Earlier, PJ opined: ?Fiber optics will be for the backbone, from originator to a distribution point, and wireless will handle the last mile from the distribution point to the home. He felt that few people would be able to afford fiber to the home. [Note - a later presentation did speak to a new, less expensive way to get fiber to the home, but it is a ways off for widespread deployment, and will not be cost effective in less densely populated areas. So I conclude HDR has substantial applicability to last mile problem.]
Revolv (Wireless Knowledge) is being designed strictly as a business application to allow travelling managers to get through the corporate system firewall and interact with their home office computers. The big problem, and it has been a tough one, has been getting through he firewall in a secure manner. [The impression was that things are moving forward and product is coming fairly soon.]
Voice recognition is coming, but slowly. They do not want to produce the disaster that befell handwriting recognition ? that by the time it was getting pretty good, people were so disenchanted and had been so disappointed that it died. They do not want the inevitable problems with voice recognition to not kill it.
At the start of the impromptu q&a, I was the first person to approach PJ. After introducing myself and saying that obviously I was a VERY satisfied shareholder (to which he smiled), I started by saying that it was obvious to me the honesty and integrity with which his father and the entire management team approach doing business. He seemed a little taken by surprise and then responded that they have always tried to take the high road. I added that I wanted him to know it was both noticed out here [by me and I know others on this thread] and deeply appreciated.
I then mentioned the issue of royalties and my surprise [which was the subject of an earlier post by me on this thread] that Q?s licenses do not look upon Q as their research and development arm. Looking at it this way the royalties they pay are an inexpensive way to get the quality of R&D provided. PJ responded by nodding his agreement as I spoke and then added that the company that works best with them that way is Samsung ? they really use Q in the way I described. He then immediately added the following (my best paraphrase): ?Nokia still can?t get the chips right, even with our help.?
In response to a question on China, PJ said they are working on it and it is going slowly ?said politics was the big issue; acknowledged that Q made some mistakes early on, particularly in making some investments that pressed the legal envelope in China; indicated that the deal that Zhu and Clinton almost had in April would have been great; he then closed by saying the bombing of the embassy in Belgrade was a big problem.
When asked about GSM and CDMA, he said the following: Already can put both GSM and ANCSII (sic) capability in phones
Then he was asked about W-CDMA and CDMA. He said they already have a W-CDMA chip and then added, whichever chip someone uses ?we get royalties on both.? [There was no hesitation, doubt or equivocation in his response ? each of you can draw your own conclusions, but for me the royalty issue is a non-issue.]
Asked about Metricomm, his reply can best be interpreted as ?they are toast.?
In the afternoon session CC interviewed Donna Dubinsky, the Co-Founder and CEO of Handspring and one of the original founding team of the Palm computer. When he asked her whether their new Springboard product (an enhanced Palm-like device, that use the Palm OS) would have cellular phone capability, she immediately said yes and invited PJ up ? but he was not in room. Dubinsky then went on to say that they are working closely with Q to develop a cell phone module for their Springboard product [something Handspring?s Marketing VP was not able to reveal to me when I met him the week before]. She said that it will be a data-centric unit with voice capability (the Springboard comes with a built in microphone). She gave the following example that speaks to more places where Q?s ASICs will be needed. The Springboard will have a bar code scanner module. By putting an ASIC on the module an employee on the factory floor can not only read in the information using the bar code reader, but immediately send it via the wireless modem rather than having to store the data and download later. [This should be a big seller to business! I have visions of a CDMA ASIC on each Springboard module that wants connectivity and more than a hundred types of modules are currently being developed. The numbers keep getting bigger, don?t they?]
Note: later in the conference George Gilder made the observation that voice and data-based appliances, i.e., cellular phones, will be the dominant appliance and not computationally-based devices like the Palm and Handspring?s products. He based this on humans being primarily communicative animals and not computational animals.
That?s it for now. Hope this is useful and was not too long. I will be happy to answer any questions. |
