Breakthrough Ideas (continued, with [additions in square brackets])
The Expanding Platform as a Strategic Innovation
Qualcomm’s architectural control of cdma2000 1X, 1xEV-DO, and radioOne is proprietary and protected by its patents. These innovations and those yet to come are commercialized in the succeeding generations of its basic ASSP platform. [The ultimate form of power for a knowledge company rests upon its abilities to innovate continually in technology and in product markets. Qualcomm advances both performance and market acceptance by offering new and unique first-to-market-advanced-technology-and-functionality based upon its three breakthrough ideas.
The introduction of the 6xxx family opens a crucial window to continuing success for the life of the 3G technology paradigm. The next three years will reveal the extent of Qualcomm’s recognition and success in becoming the 3G powerhouse, the 3G world ruler, the 3G gorilla, that is implicit in its play on the advanced performance inherent in its basic platform. That is, the outcome of the mission to expand CDMA worldwide, including cdma2000 1x, 1xEV-DO, WCDMA, and radioOne world phones, will be largely determined and more widely recognized by carriers, customers, and pundits by 2006.
Also, Qualcomm’s unequivocal success will herald the now expected success of its 10th and future generation of chipset families, each with fresh incarnations of a more and more segmented basic platform that is also more and more augmented with expanded functionality. That is, both the basic platform and its augmented expansions ride Moore’s law by the advances in both QDSPs and its ARM cores from the ARM7 to ARM9. The ARM11 in the 10th generation CDMA family, along with advances in antenna diversity, which were made possible by the radioOne advances, and in further advances in coding for error correction, encryption, multimedia, and the like, will join with new forms and standards of connection to continue to augment and expand functionality. This means that customers by 2005 will begin to anticipate with excitement the roll-our of new capabilities and applications because Qualcomm’s brand will have become associated with leading edge excellence in mobile connectivity and its proven ability to continue to drive features and functionality with each new generation of chipsets. Successful world phones will magnify the power of Qualcomm’s and its carriers’ brands.
Within three to five years, the success of its consumer electronic model for differentiating new products beyond mobile connectivity for telephony will become apparent by the shorter replacement cycles and multiple household penetrations that this model generates. The consumer-electronics strategy rides the power of modularity. Augmentation by modules that profit from Qualcomm’s spectral efficiency in mobile connectivity creates added value for both Qualcomm and its value chain.
Better yet, the competition to introduce the best module first drives OEM manufacturers efforts to develop and experiment with module-improvements that are independently researched and then plugged into Qualcomm’s expanded platform because the superiority of its basic platform attracts modular products to its platform hub. Thus, each modular addition augments the platform and adds the modules value to Qualcomm’s added value. OEM’s will compete to facilitate the most advanced camera performance by selecting either CCD/CMOS sensor cameras as rival revolution of standards and, within any specific digital camera technology, by scaling up to megapixel performance. The same phenomena will occur in video camcorders, methods of storing data in a mobile, or systems of displaying the human interface, say, to facilitate playing games alone or in interaction with others. We cannot even guess what killer applications lie ahead. But we know when we hear statements like, “In Japan, black-and-white-screened mobiles can now only be seen in museums,” that the consumer electronics model will drive many modular advances requiring short-cycles of continually upgraded replacements.]
What is important for you to notice is that Qualcomm’s basic platform includes many other architectures and standards beyond the three breakthrough ideas that will now be discussed as the expanded platform in contrast with the basic ASSP platform. This distinction is strategically vital because it epitomizes the difference between setting a standard and how to leverage a de facto standard to become a standard-setter. Of course, the expanded platform is also embodied in its ASSPs, but the conceptual distinction remains noteworthy.
To leverage its power, which is securely nested in its patented and proprietary CDMA innovations, Qualcomm adds innovative building blocks and nonproprietary or licensed standards-as-building-blocks to its enduring, expanding, general-purpose, and potentially-industry-wide-standard basic ASSP platform. Following Brandenburger and Nalebuff (1997), think of power as equal to added value. The more value the star-node adds, the more its power increases because it eventually acquires much of the new standard’s additional added value by incorporating the subsumed standard as part of its expanded platform. In this way, the subsumed standard’s predominant function, say, as an MP3 player or as a mega pixel digital camera, becomes just another stream within the confluence of the platform’s general purpose of mobile connectivity. [The market for mobile connectivity extends the product markets of the MP3 player or digital camera; the consumer electronics’ model drives replacement sales of mobile terminals.]
When Qualcomm introduces what-it-calls “complete standardized solutions,” it does so bidding to become a de facto standard. Because it satisfies all users needs, a package of complete solutions, taken together as one whole product, has a standardizing effect. That is, a complete standardized solution drives the setting of the complete solution product as a de facto standard. This is also so because, like the concept of the whole product, which satisfies all user needs, the whole package of solutions and standards becomes much more valuable than the sum of its component’s modular architectures. The packaging process itself, as a single integrated platform, dynamically scales, adding exponential value. [(Camera times Phone times MP3 player times Internet Access, etc, when amalgamated as mobile connectivity equals an exponential explosion in added value.)] The tight integration of the package within a single chipset adds value to the packaged product, along with the values added by each of the modular components comprising the packaged amalgam. And, this valuable combination synergistically increases exponentially the overall functionality, timeliness, reduced-total-cost-of-ownership, and ease-of-use. Thus, the total added value of the combined and complete solution packaged product becomes exponentially multiplied, attaining offscale dynamics. When a complete, but still deepening and expanding, package becomes a de facto standard solution in an industry, this combination’s scale-dynamic may redouble from the offscale-force of tornadic hypergrowth introduced by demand-side scaling.
Qualcomm’s Unique Position. Although the battle to become the 3G de facto standard solution can still be described as ongoing, given the absence of a 3G tornado [although I suspect that a near doubling of MSM sales, with a projected CAGS of 30+%, does qualify as a tornado], Qualcomm’s innovative technology leadership and preemptive first-mover advantage marks its technology leadership as mobilizing, redefining, and shaping the competition for the future. At a minimum, every current news story on 3G recognizes its core competence by labeling Qualcomm as the commercial innovator of CDMA.
Using Regis McKenna’s (Davidow, 1986, p. 92) definition of positioning, “Positioning is a psychological location in the consumer’s mind, pertaining to the relative qualities a company, product, or service may have with respect to its competition,” Qualcomm is positioned as the third-generation spread-spectrum “technology leader.” The company deservedly owns this position. “The 3G technology leader” best defines the quality currently associated with Qualcomm’s mindshare. [However, Qualcomm strives to position itself as the mobile connectivity standard-setter. This is the sort of mindshare that Microsoft demonstrates and Qualcomm seeks.]
Not only does Qualcomm possess unusual talent as the technology innovator and commercializer of spread spectrum, however, it increasingly offers complete standardized solutions, which are intended to meet completely the needs and priorities of its customers and, thereby, to drive and expand worldwide markets. But also, a complete standardized solution develops into the de facto standard solution by successfully fully resolving compelling business problems or fulfilling unmet or unrecognized consumer needs and priorities.
This theme of striving for completeness is itself a strategic innovation, a premeditated, planned, tactical advance that is designed to meet the strategic goal of building and preempting the dominant share of a global market in mobile connections.
I claim that Qualcomm’s expanding platform is intended to embody Dr. William Davidow’s (1986, p. 36, his emphasis), strategic principle of marketing:
"Marketing must invent complete products and drive them to commanding positions in defensible market segments."
A legendary marketing expert since Intel’s successfully orchestrated promotion of “Operation Crush,” Davidow wrote the classic book on marketing high technology. He recognized that among the thousands of reasons that a high tech company goes out of business, a common one is the failure to achieve a commanding position in a well-defended market segment. Davidow (p. 24, his emphasis) believed that the shakeout phenomenon is a manifestation of this specific failure in positioning: “The companies that vanish will be those that didn’t make themselves unique in their customers’ minds.”
Qualcomm uniquely shapes the future of always on, always with you, connections. I claim that, when you mate machine beauty with unmet, unrecognized, and unrelenting human desire, Qualcomm connects with consumers.
Platforms of broad and increasingly expanding scope win mindshare. [Mindshare not only breeds network effects, the most important scale dynamic in a standards-based business design, but it also keeps customers and the value chain waiting expectantly for the mindshare leader’s new products.]
Remember that Ferguson and Morris (Computer Wars,1993, p. 131)) said, “Architectural franchises are built upon successful products.” It is outstanding products based upon proprietary architectures that can be transformed into a long-lived, general-purpose platform. The basic platform serves as the fulcrum that an expanded platform levers to morph a company from setting a standard to becoming an emergent standard-setter. Qualcomm is in the midst of this transformation in mindshare that is at the heart of scale-force-dynamics.
Thus, as Qualcomm extends the basic platform’s engineering innovations to the expanded platform’s marketing innovations, a significant key to its success becomes Davidow’s conceptual distinction between a device and a product. Technologists invent devices, but marketing invents a true product. According to Davidow (p. 27, his emphasis):
“A product is the totality of what a customer buys. It is the physical device or service from which the customer gets direct utility plus a number of other factors, services, or perceptions, which make the product useful, desirable, and convenient. When a device is properly augmented so that it can be easily sold and used by a customer it becomes a product.”
Expanded Platform Products. Included in Qualcomm’s expanded platform are: (1) gpsOne position location; (2) Internet Launchpad; (3) BREW Application-Peripheral Interface, and (4) QChat’s push-to-talk technology. [Consumer-electronic-modules nest comfortably within the Internet Launchpad architectures. Applications that drive customer satisfaction are facilitated by BREW.] These strategically innovative technology solutions are intended to augment terminals-as-devices and to deliver total customer satisfaction by completing a whole product that strategically delivers what businesses and consumers specifically need and require from mobile voice and data services. |
