Dr. Jacobs Interview>
win Jacobs
Interview
Biography |
JOEL STRASSER: This is Joel Strasser with WCN, the Worldwide Corporate Network. We're talking
with Dr. Irwin Jacobs, Founder, Chairman, and CEO of Qualcomm, Incorporated. How are you today,
Dr. Jacobs?
IRWIN JACOBS: Feeling very well, thank you.
JS: That's good. Our purpose in this year's special report on wireless horizons is to see where we've
been this year and where the future will take us as viewed through the very perceptive eyes of one of
wireless technology's leading pioneers and guiding lights. From both Qualcomm's and the wireless
industry's point of view, what in your opinion were the three most significant developments or
achievements that occurred during this past year, 1998?
IJ: OK. I'll probably go with this somewhat from a Qualcomm point of view, obviously. First of all, we
have been advocates of CDMA, wireless technology that provides very, very high quality and capacity,
provides cost capabilities that allow significantly reduced air times and more usage. So we see that
one of the significant developments this year was that CDMA, in effect, has been accepted as either
the present or the future technology for just about all of the world. The proposals to the ITU for next
generation technology largely involve CDMA, so from our point of view, that's been a very interesting
development. A second one, with the widespread build up of digital technology and the increased
competition among carriers as well as manufacturers, the cost to support subscribers has come down
substantially and the pressure to provide new marketing plans has come in. So I think one of the
interesting developments has been the marked reduction in the cost of providing wireless services and
the cost of using wireless services and the beginning of a transfer from wireline to wireless among
subscribers. The third development that I think has been kind of interesting is the strong increase in
interest in wireless data. In wireless data in a form that's compatible with wireline and other means of
communicating data -- that it is now becoming a target for the operators and I think will become quite
widespread. We ourselves demonstrated what we call a high data rate (HDR) system that provides over
one megabit per second of voice data, so that it's a very good Internet capability. And we also set up a
venture with Microsoft called "Wireless Knowledge" to support operators in introducing wireless data.
JS: In a few seconds I'll get into the Microsoft thing, but I want to cover some other ground first. Again,
from both Qualcomm's and the wireless industry's perspective, what do you believe will be the three
most exciting developments or achievements that you may expect to occur during 1999?
IJ: Well, I think that we'll see kind of an extension of some of the things that have started in 1998 that
will pick up acceleration. In one case, there's been a lot of work on the standards for improving
wireless. Some refer to it as third generation and cdma2000. Those will not occur this coming year, but
I believe we will begin to see the standard bandwidth improvements in CDMA, what we call cdma2000
1X or first phase, beginning to come into use. So a significant improvement in capacity and an ability to
handle data rates along with voice up to the hundred kilobit per second range. Secondly, I think the
marketing plans that I mentioned that started in 1998 will accelerate further, I.E., the ability to have
nation-wide coverage and to a certain extent, world-wide coverage. I think this is going to hasten, for
many subscribers, the transition from wireline to wireless. So I suspect this year we'll begin to see
significant numbers of subscribers begin to rely almost completely on wireless. Finally, we'll be seeing
new types of instruments -- I think further moving toward low-cost, small-sized, very capable phones --
also now the marketing of smart phones. In the case of Qualcomm, the commercial introduction of our
pdQ phone, which is the combination of the Palm Pilot and the telephone. I think we'll find a number of
subscribers and wireless users, finding this type of equipment very, very exciting.
JS: I can see where they could be quite useful and quite attractive. I've seen some of it described at
your web site.
IJ: I'm finding I'm getting myself hooked on it quite rapidly.
JS: You have been called the "Father of Telecom." I wonder if you could tell us what got you started in
this business and what were some of the developments that led you to start Qualcomm?
IJ: Well, of course that could be a very long question to answer. But, basically I originally graduated
with my Ph.D. from MIT and started teaching there in Information Theory. In 1966, I went down to teach
at the University of California at San Diego, after we found out that we liked California very much. And,
because of my MIT background, in the defense industry there was a lot of demand for consulting. As a
result of that, along with a couple of other people including Andy Viterbi (he was a professor at UCLA at
the time), we started a small consulting business called Linkabit that began to grow rapidly. I took a
year off from the university to run that, decided that was great fun, and entered the business side from
the academic side. With the point of view of trying to introduce new technology, to try to bring it to
market rapidly, and in particular to focus on digital technology - one of our last products at Linkabit,
before I sold it and then left, was the development of a time division multiple access wireless (TDMA)
telephone largely for fixed location, wireless local loop, but the first commercial TDMA telephone. In
any case, we sold the company in 1980, I left in 1985, retired for a few months, decided that wasn't
much fun, started Qualcomm to keep a hand in the business. I think within certainly the first several
months, both myself and the others who were with me, came up with the idea of low earth orbit (LEO)
satellites, which has become the Globalstar System, to communicating using geostationary satellites,
which has become, I think perhaps the only profitable wireless data service, our OmniTracs System.
And, of course, CDMA terrestrial. So that was very exciting. Another aspect of that, and perhaps this
"Father of Telecom" here in San Diego, if nothing else, begot from the original company the model that
we followed of trying to develop technology and communication. Bring it to market quickly, focus on not
only development but also manufacturering, that has spawned about now I think 33 or 34 other
companies. People that had been working at Linkabit in one way or another followed that same path
and decided to form their own companies. So now it's led to a very booming telecommunications
business here in San Diego.
JS: OK. What has been your involvement with wireless local loops in offshore markets.
IJ: Well, the same technology (CDMA) that works very, very well for mobile, also has capability
providing good fixed service. It does it rapidly, and actually less expensively than wireline service in
most locations. Therefore, to provide a very large potential business in supporting telecommunications
in emerging markets. So we see that as a very large business going forward. It's been slowed to date
by a couple of developments. One is that the basic telephone service is usually handled by the
traditional telephone companies rather than by new mobile companies, and they just generally tend to
move more slowly and often have a lot of government controls, etc. But despite that, all that is moving
ahead. The second limitation, of course, has been the financial crisis that's occurred in much of the
developing world and has certainly slowed down the capital investments necessary to build up these
systems in many locations. But, interestingly, because telecommunications is so important, although
it slowed it down, it probably still is one of the areas that is receiving investments as compared to other
areas of potential capital investment. So, looking ahead, I would say that the wireless loop business
will, in fact, continue to develop and at some point begin to approach the mobile business as far as the
size of the overall marketplace. The capabilities of the wireless phones to support all the various
services and indeed to provide even good Internet access and do it cost-effectively and very flexibly, will
continue to improve and I think become a very compelling service. And finally, since it is wireless, one
could think that it can immediately be providing what I often refer to as an extended cordless service,
that is you can have a portable phone that works very well not only within your home but in the
neighborhoods. In some cases that will over time be extended I believe to full mobility. So, it is a very
interesting business area. Finally, I think here in the U.S. and other developed countries we're going to
see more and more use of wireless. Again, as I mentioned earlier, the airtime charges, the capabilities
of the phones, the quality of the conversations, the pricing, all of these are leading many people to
move from wireline to wireless service. Some of the operating companies find that they can extend their
service and provide additional lines by using wireless. I think each of these will cause, again, the
wireless local loop business to expand even in developed countries.
JS: Could I ask you to summarize the battle for 3G, third generation dominance, and tell us how you
think it's ultimately going to play out.
IJ: OK. The main aspect of third generation that we've welcomed very strongly is the fact that most of
the proposals made to the ITU for IMT 2000 third generation technology have involved direct sequence
CDMA. So there seems to be an agreement, both among people currently using CDMA and those that
have not in the past, that this is the right technology for supporting additional voice and data services.
There are, however, issues of selecting the right standard or having multiple standards. There is one
school that believes that a standard that is significantly different in detail, even though CDMA from
existing CDMA, allows them a better competitive position. Others who believe that one should (we're
among the latter) have a single standard for CDMA worldwide rather than having multiple standards,
and that it be equally friendly to the two large mobile networks that will exist and do exist in the world:
ANSI 41 that supports US TDMA and CDMA (not just in the US but in many parts of the world) and
GSM- MAP that supports all the GSM subscribers. So, the standard should be equally supportive of
both of those networks. And finally, wherever there's a feature that would provide approved capability
that should be used in this unified standard. But if, on the other hand, choice doesn't yield any
particular advantage, then use the one that's most evolutionary because we have the best experience
with that. It provides the lowest risk and should provide the least cost and ease of transitioning for
existing operators. There is the discussion over that. For a period of time it appeared that there might
be a movement toward multiple standards. That still is a possibility, but I think now there's quite a bit of
discussion of convergence. We have stated that we are quite willing to license our intellectual property,
our patents, in situations where we have the single, converged standard, but that we would not
necessarily be willing to do that if there was a standard that wasn't compatible. We have referred to
this as one of our three fairness principles. So, that has I think among other things, caused
reconsideration. But I suspect most operators and most manufacturers recognize that it's just
tremendously advantageous, in introducing a new standard that's going to be very expensive, to have a
single such standard for CDMA. There could be another one for TDMA if that ever proved economical.
But for CDMA, have a single one worldwide. Should that occur, then I think a number of the existing
players will be continuing to play a role, so I'm not sure any will dominate. It can be a very, very large
market, a very interesting market. In the interim we will continue to evolve our existing CDMA,
improving the capacity, the efficiency, adding higher data rates. So, evolutions will continue while the
discussion over a new standard hopefully reaches a positive conclusion.
JS: It does look like, from press reports and so on, that CDMA is certainly coming on rather strong.
Can three separate standards co-exist comfortably?
IJ: Well, no I would think that by far the best is to have a single standard. And I think, again, most
people recognize that is the best way to move ahead.
JS: Well let's hope that common sense prevails. I know you mentioned it when we first started, but can
you tell us about your new relationship with Microsoft, and where do you think it's going to lead?
IJ: Well, we've been talking with Microsoft for about a year leading to the formation of our new 50-50
joint venture called "Wireless Knowledge". During that period we worked on the parameter of what we
thought would be most useful to the industry, agreement that it would for example, support the various
means of transport, it would not be just CDMA, it would also support TDMA and another technology
called CDPD. Whatever, that it would be very much devise independent that it could work with the new
smart phones, but also work with two-way paging devices, and that it would use standard Internet
protocol. It would not be special protocols and special software for wireless, but that "Wireless
Knowledge" would provide capability to support the operators so that users would use their standard
Internet technology; that the security issues and the formatting issues for small devices, small
keyboards, that the service issues would all be taken care of by "Wireless Knowledge" and, therefore,
the users could either with their standard wireline but now going to wireless, be able to access their
corporate networks and not have any significant difficulties. This concept, by the way, we developed
services to support this on software and we were able, at our initial press conference, to demonstrate a
number of different devices providing a whole variety of services using the "Wireless Knowledge"
software. This is quite appealing to the carriers, and so at the initial introduction we had at least nine
carriers involved. We're talking to a number of additional carriers. We're also looking at ways they may
be able to participate as equity owners as well. So I think that it's now beginning to pick up
momentum. The implication, first of all having Microsoft involved in the wireless business, is very, very
significant. They recognize that, again, this strong transition from wire to wireless, the desire and the
need for both workers, people in job situations, and also in personal situations, being able to have good
wireless connections, Internet access, various PIN functions, and have those available very
conveniently. That recognition, I think, is very important because they obviously play a major role in so
many aspects of the data business, but in particular what appears on our desktops. And, so that will
help make sure that these services can be handled very, very readily. And, again, they'll provide
guidance so that we not only use existing Internet protocols, but in developing new protocols the
wireless will be taken into account as well as the wired capabilities. So, we think that this, again, is
going to help accelerate the introduction of wireless data services, the popularity of wireless data
services, and the quality of wireless data services. And, therefore, I think "Wireless Knowledge" is
really one of the major steps that have occurred this past year.
JS: I know this is kind of a side question, but how soon do you think we'll start hearing a little bit more
about "Wireless Knowledge".
IJ: We're going through some additional friendly user tests, kind of checking through Beta software.
We're hoping this coming quarter, the first calendar quarter of 1999, to begin to see some commercial
applications and customers coming online. There is a need for the operators to have their capabilities
supporting data services on their side and then being able to connect into "Wireless Knowledge". But
we see that moving ahead fairly rapidly.
JS: OK. I realize my next question doesn't really have anything to do with your principal negotiations
with Microsoft or Bill Gates, but I'm sure as in any negotiations or any conversations, that there might
have been some side comments. I was just wondering if you could give us any insights into how Bill
Gates thinks how the current Justice Department actions will end up.
IJ: I'm sure I know what he hopes, but I'm not sure exactly where his thinking would be. No, we really
didn't discuss that area at all. Clearly, it's an action that effects the industry quite a bit. It's a very
dynamic industry, so situations change very, very rapidly. I would not want to comment on how this
case is going to come out. I certainly don't know what Bill thinks about it.
JS: All right. You're right when you say it's changing rather rapidly. All we needed were a couple of
actions by Netscape and AOL.
IJ: That was certainly one of the major changes that have occurred since the case began.
JS: I'm sure there will be many more before things happen. Well, if I may, if we were to ask you to
project what the wireless industry both five, and again ten years down the pike into the future, WOULD
LOOK LIKE, how would you characterize the future of the industry?
IJ: Well, for example, I would imagine in five years we'll be seeing at least a billion users of wireless
and that most of those users will be using their wireless phones almost exclusively. That is, many may
not have wireline phones. Certainly by ten years from now, I suspect anybody using a phone with a
wire on the end of it will look rather old-fashioned. And so I see that very, very strong transition. I think
the phones will continue to have additional capabilities, and indeed be a strong merging with our
computers. And so today, whereas I carry around just about everywhere a laptop computer, probably
looking ahead five years I'll probably only carry around a telephone which has tremendous computing
power within it, gives me access when I'm in a mobile situation, but that it has the ability to dock with
other devices as I dock my laptop when I'm at my desk. So it gives me larger ability to have a screen
with it. But it will be providing a good part of my computing needs. Again, as I look out ten years, it will
be providing all of my computing needs. The voice part of the telephone, of course, we're already
digitizing that. Voice recognition will become increasingly important, in that as we have these small,
portable devices with essentially very little room for keypads, the ability to control them and enter data
through the use of voice recognition will become more and more predominant. I think the Internet will
become more and more a major part of telecommunication, so that more and more voice will be
traveling over Internet types of protocols. Voice over Internet protocol will become more and more the
least expensive way to support data and voice, and therefore, continue this reduction in cost of telecom
services. So I see that trend building up quite rapidly. The full capabilities of wireless devices and their
connection to the Internet I think are going to just change very markedly, not only in the way we carry
on our day to day conversations, but probably the way we do business, the way we educate ourselves.
Just having this rich variety of services available from the Internet wherever we might be, allowing us to
shop, to learn material, to keep track of daily events, to interact with our offices, that's going to change
the way we live. It's already had an influence, wireless, but it's going to become even more
predominant over this next five and certainly ten-year period. So, again, I see it having a major impact
on the way we live. It will also open up, I believe, some additional entrepreneurial possibilities. Clearly
the Internet is one of the most exciting areas for people starting new businesses, but now when you
have most people being able to access the Internet almost on a continuous basis through the wireless
devices, then there's a whole variety of services that will be offered on the Internet and have good
economic consequences. So I see that spurring a whole additional range of innovation. "Wireless
Knowledge" is kind of a first step in that direction, but there will be lots of things occurring. Finally, I
suspect that in the industry, there are many, many players. There are certainly consolidations
occurring on the operating side in a number of companies. I suspect that we'll see that continue. That
the devices, the manufacturers, that there may be smaller numbers of them, but that will be made up
for by the new entrepreneurs offering new types of services and signing up to small companies. So
consolidation of a number of the companies, but just a continual growth because of new types of
capabilities coming along.
JS: OK. That's most interesting. Are there any final thoughts that you have about wireless that you
want to be sure to have included in what we're discussing today?
IJ: Well, I must say that one of our major limitations has been finding well-trained staff. So, again, I
think one of the important aspects is to be planning ahead and trying to encourage more young people
to enter technical fields and gain a good technical education, because this is an exciting area and one
that has room for many, many future contributions.
JS: OK, Dr. Jacobs. I want to thank you very much for spending the time to talk with us today to tell
our listeners and visitors what you see in the very near future. We have been talking with Dr. Irwin
Jacobs, Founder, Chairman, and CEO of Qualcomm, Incorporated, from his office in San Diego,
California. And we want to thank him for being with us today. Thank you, again.
This is Joel Strasser, WCN, New York.
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