This recent interview in BW with Jacobs affords the Q is interested in GSM , or as some call it "Toast"?
Q&A: The Future of Wireless Is Speed, Speed, Speed
Qualcomm's CEO on the new technologies ahead -- and redirecting his company to produce them
Irwin M. Jacobs, chairman and CEO of Qualcomm Inc., has been a prescient and provocative observer of wireless communications technology. A decade ago, the former MIT engineering professor championed a wireless technology, dubbed CDMA, for code division multiple access. Most thought CDMA too complex for commercial use. But it has proved more efficient than anything else on the market. Qualcomm has grown into a $4 billion developer of wireless technology, and its stock has jumped more than 13-fold this year (see BW, 12/6/99, "Qualcomm: From Wireless to Phoneless"[subscribers only]). Jacobs spoke recently with BW?s Steven V. Brull in San Diego about wireless data technology, Qualcomm?s radical restructuring plans, and the company's high-flying share price.
Q: On Nov. 8, you demonstrated your high data rate (HDR) technology that will be able to transmit 2.4 megabits of data per second. That?s more than 40 times the speed of a 56K modem. Why would anyone need such speeds in a cell phone?
A: In a couple of years, we?ll see phones with continuous high-speed connections. For many people, these devices will be their computers. They?ll be linked to other devices. Going forward, there will be a lot more stuff on the chips inside -- such as [technology for] data and global positioning. Voice recognition will offset a small keyboard. Just as cellular freed the consumer from being tethered to the wall, this will free your computer from the wall.
Q: How will the market for HDR develop?
A: There will be two major markets -- the home market, and the mobility and business market. For wireless operators, HDR will be a new source of revenue.
Q: But even wireless operators will have to make new investments to use HDR. How can it compete in the residential market against cable modems and DSL [digital subscriber line] technologies?
A: Cable companies have costs for upgrading their networks and for set-top boxes. There also are costs for wiring in-home networks. DSL is a similar story. If we?re competing against TV programming, we?re not so strong. But if it?s Web-based applications, we?re competitive.
Q: Nokia, Ericsson, and other European outfits building GSM [global system for mobile communications] equipment also are pursuing wireless data technologies. Doesn?t the GSM group?s 85% share of the global wireless market limit HDR?s commercial potential?
A: I believe we?re way ahead of the wireless data solutions from GSM carriers. They?re going to have a difficult time getting beyond their current data rates. It?s doable, but it isn?t going to work very well. I don?t know if we?ll be able to sell HDR in Europe. But if not, then they?ll be behind in data .
Q: Qualcomm is selling its manufacturing operations that helped establish CDMA in the market, but which have been losing money in recent years. In May, the cellular infrastructure manufacturing operation was sold to Ericsson. And you?ve said you expect to name a buyer of the handset manufacturing division by yearend. What?s the status of those talks?
A: We?re in talks now with more than three potential buyers. We?ve had several preliminary offers. Our strategy is to get a company with a good probability of success, one that will support our customer base and employees, and be a good customer for our chipsets. It?s likely to be a foreign company, but not necessarily.
Q: Qualcomm President and COO Richard Sulpizio has said you might use some of the $1.6 billion in cash and equivalents on the books to acquire GSM technology in order to build dual-mode chipsets for both CDMA and GSM networks. Can you confirm this?
A: Yes, we?re looking around at possible acquisitions. We?ll work with someone who has GSM rights. It could be a strategic relationship such as cross-licensing. We need to find a solution. A strong enough acquisition is another way to go. We could use cash and stock. This is new path for us -- we?ve never done acquisitions before.
Q: Qualcomm stock has soared some 13-fold so far this year. Is the share price overvalued?
A: A year ago, my biggest scare was whether someone would buy us at such a low price. I still don?t understand why nobody did. Now what?s keeping me up at night is worrying about how to capitalize on all these opportunities. The high valuation gives us lots of options. We want growth, but without shaking up the market.
EDITED BY DOUGLAS HARBRECHT _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
