Silicon Valley Doesn’t Get Qualcomm
On the Succession of Paul Jacobs at Qualcomm and the collision of the Computing and Telecom Galaxies.
After nearly nine years as CEO, Paul Jacobs will hand over the reigns of Qualcomm come March. By sharing a personal anecdote about Paul Jacobs, I hope to shed light on Qualcomm, a peculiarly successful, not well understood company.
Having worked at Qualcomm for many years, I was used to people not getting it when it comes to my employer. Even in San Diego, where Qualcomm is headquartered, it befuddles people. Upon meeting someone new and mentioning where I worked it was not uncommon to see their face become animated and ask about getting tickets to the upcoming Chargers-Raiders game or, better yet, inquire as to how much I make slinging hot dogs in the stands.
This misunderstanding of who Qualcomm is and what it does has been there since the earliest days of the company, and has helped Qualcomm compete as an underdog. In the early 2000's, on a flight from San Diego to Silicon Valley, Paul Jacobs alluded amusingly to this fact. Scheduled to participate in a Red Herring Conference Panel on wireless at Stanford, Paul anticipated conflict. He told those of us on the flight: “This ought to be fun. Silicon Valley doesn’t get us. I expect it to get heated.” And sure enough, it did.
An executive from Intel, pounding the table with his shoe, implored the audience to adopt “an open standard wireless protocol like Wi-Fi” instead of an evil proprietary protocol like Qualcomm-backed CDMA in their choice for a wireless future. At the time, Intel was the reigning giant of the computing ecosystem. Paul Jacobs interrupted the pounding and imploring to point out that CDMA was not in fact proprietary, that there was a standards body that managed and authorized standards in the telecom world, and that anyone in Silicon Valley could gladly participate in this process, just as they could in the world of computing. Silence from the panel and in the room. Silicon Valley did not get Qualcomm.
Actually, what the Valley and its computing bias didn’t understand at that time was the business of wireless spectrum—how it was managed, controlled, doled-out and monetized to deliver phone and data service to 5 billion people globally. The business of spectrum was far different than the business of computing, which at that time was the bread and butter of Silicon Valley innovation.
We could spend hours de-obfuscating the complexity of the global wireless ecosystem, pulling the tangled strings of how each region of the world delivers service through separate carriers and those carriers have rights to use various spectrum and how the information floating in that spectrum is defined by standards established in international committees and how well capitalized carriers are equipped more than others to roll-out newer generations of a standard…but you get the idea. It is complex. (I bet the total number of employees at Qualcomm contributing to global standards bodies exceeds the number of mobile developers at Facebook.)
By making a magical chip that allows a mobile device to function on any wireless carrier in the world, Qualcomm insulates smartphone companies from having to worry about that messiness. Software engineers call that abstracting away complexity. Qualcomm has made that messiness its business—the standards bodies, the politics effecting global wireless spectrum, the IP issues, the tricky RF interference in the silicon to satisfy all the local frequencies, the supply chain issues of manufacturing a chip that is compliant in each local market—and this is what has allowed Qualcomm to succeed where others have failed.
Because Qualcomm’s abstraction can be materialized in a chip the size of a nickel, three enterprising women in Shenzhen can develop a smartphone that is sold to a taxi driver in Moscow or a farmer in Caracas. There is also a “little” company in Cupertino that can now ship mobile devices anywhere in the world without having different models for different regions. (This feature is much appreciated when your CEO is a supply chain genuis.) That little company—Apple—has garnered the most profit from the world’s insatiable appetite for portable devices. Qualcomm, arguably, is next in line. Both are profit machines. (Don’t get me started with Samsung’s crazy accounting…)
The Computing Galaxy and the Telecom Galaxy Collide
Stop and imagine this astonishing trend for a second. After the last decade of upgrades, nearly 5 billion people will soon have access to portable supercomputers in their pocket, all wirelessly connected to the internet and thus to each other. This jaw-dropping achievement derives from a collision of two distinct galactic industries: the Computing industry that began in 70's and the Wireless Telecom industry that began in the 80's.
Over the last decade, these two industries which operated independently for so long, collided. (Horace Deidu says “converged” but “collided” feels more apt at capturing the video game-like destruction that ripped through seemingly unstoppable companies—think Asteroids.) This collision of galaxies created beautiful new products. The iOS and Android devices that now show up on lunch tables around the world and in kids backpacks and in your grandparent’s hands—all come from this convergence.
Of the handfuls of companies emerging from this collision, only four emerged in positions of strength—Apple, Google, Samsung and Qualcomm. And of those four, only Apple and Qualcomm existed in the earliest days of their respective industries. Only two companies from the earliest days…extraordinary. All the others have been laid to rest or weakened (e.g. Nokia, RIM, Microsoft, HP, Compaq, Ericsson, Lucent, Motorola, Intel)
Over the last decade, Paul Jacobs managed Qualcomm thru the “collision” of these two galaxies, the computing and the wireless. In hindsight, that is what us software developers call a non-trivial achievement. And thankfully for Paul Jacob’s successor, the need for a clean API to the messy, global world of wireless computing isn’t going away anytime soon. I’ll enjoy watching from the stands, beer and hot dog in hand.
