Qualcomm has started losing its territory /dominance in wireless for the konwn reasons and we all know this is just a beginning. Now, the question is what it can really do at this point to prevent collapsing or slowing down its pace in a long term? The whole goal for Qulacomm is not join the list of other giants like (Nextel, Nokia, Motorola, AMD, Sun, etc.).
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To the OG post.... Are you starting smack talk because you can quote news reports? Where is the real data? How do you know this is happening?
Please dont tell me your a line tech with 200 shares of ESPP wanting to make more money.....
Probably number of people on PIP this week that won't have to be listed as a layoff when the next round comes.
@Anonymous89570, what metric do you use to determine if it was a great week? Smile vs. frown ratio in building N? Number of contractors hired?
Who is that HR cheerleader?
We should all admit that Q doesn’t have any problem as long as it has a cheerleader like Anonymous89570!! Everything is a rumor Qualcommers and don’t believe it only until you feel it yourself :)
Great job this week Qualcommers. Don't let some persnickety rumor mongers spoil your weekend. Have a great time and see you all next week!
Infrastructure wasn't designed to make money, it was designed to drive the market in the direction Qualcomm wanted, which it did. It could have been made profitable but no real every was made to do so.
In the end what doomed it was the value of the invested stock options that could be returned prior to the China deal and stock price boom.
But the lesson about it for today is how the company did it, the lies, maneuvering, executive changes and small restructuring, cherry picking of connected employees to set the stage for the only large scale divesture to date.
The exact same pre divesture maneuvering is going on right now.
I think if we are all honest we see the writing on the walk. Omnitracs funded CDMA, CDMA resulted in a lot of IP that funded silicon, but that's stating to go downhill for a lot of reasons, and nothing is there to replace it. Globalstar, MediaFlo, and a dozen other projects from digital theater to displays have not been big gainers to keep it going and Q has billions but no place to hang their hat for the next rodeo.
It was a great ride while it lasted, but it is all downhill from here.
Granted, I could be wrong, I've been wrong before, so someone tell me as royalties drop from 10% of $600 phones to 3% of $200 phones, where is the difference going to be made up?
Because if it's not the 6 billion being spent on development will be 3 billion in a couple years, and where does that leave the young ones? Especially in SD where it's slim outside the Q?
@Anonymous89484: in all fairness, QC never made money in infrastructure. So abandoning that division was a no brainer since it was always money losing.
A more accurate comparison was QC's handset business. It did generate pretty good returns for some time, simply because back then QC was one of the first ones on the market. (I still have my original qcp-1900, which by today stands literally is a brick). But QC jettisoned that division as soon as its profitability started to deteriorate. And it always happens a lot quicker than people expect it to be. QC does have time with the latest chip/platform offering since, it still has a pretty decent lead if we're talking about high end. The issue is high end has started to saturate, and low end margins will be under pressure from the likes of MediaTek, Spreadtrum, and every other chinese low cost player. Add now Samsung into the mix too as a chip supplier, and intel that doesn't have a problem throwing more money at the problem.
Motorola was much more than just a handset provider at one time they were the number one IP holder in wireless communications. Q copied them a lot in the early days, including poaching their engineers and even copying their stupid moves, like iridium.
There probably is 10 years of 2g and 3G revenue left but it is declining and that decline is accelerating.
4G LTE flat networks reduce Qualcomm's patents from about 280 per device for aCDMA enabled one to about 30, most centered around CA.
Out of those 30 there's probably 10 that the court would throw out easily and there's several others that have work arounds, and all can be pushed aside if they get to expensive, especially in China.
You can find all the patents on Agile BTW.
Royalties are based on a handset price and the market is saturated and low end devices are the only ones with Q chips gaining market share.
Royalties per device are dropping, in a flat LTE market they will be half of what they are today at best. market share is dropping. handset prices are dropping.
If you are an engineer in your 20's or 30's in SD, you only need to look back at infrastructure division to see your future, and like then the cheerleaders will be out in full force prior to the butchering making noise to keep the stock prices up.
The company is already positioning for major cuts down the road. Don't believe it? Ask around and open your eyes.
Mot was always a handset maker first and foremost...they failed selling handsets, and that die was cast in 1995 if not earlier thanks to Weisshappel/Galvin. There's at least 10 years of 3G/4G gravy train left, with or without QCT's help. OEMs can try workarounds to 4G SEP, but in the meantime, better keep paying that royalty rent to avoid eviction from the marketplace. Where do you get that flat LTE gives little royalties? Some citation would be greatly appreciated. It's not obvious.
You think apple would let Q buy ARM? Not very likely.
Networks are getting flatter, phones are getting cheaper, all the pressures are downward. Flat LTE networks, including VoLTE leave very little royalties for Q, unlike CDMA there are workarounds for most of Q's OFDM portfolio and no one wanted Q's in house VoLTE solutions because of the cost.
Qualcomm isn't going away overnight, but they have crested. Their relevant IP is shrinking and they have more competition in a market that is increasingly a commodity.
Who is going to get squeezed to make up the difference? We all know, despite the cheerleaders banding about IOT and 5G, Q is all about the 3g the way Moto was about AMPS.
Q will have to reduce price to maintain market share. How long before all of the US QCT presence in W and WT and AQ and those new buildings are for rent? I'm being sooner than you think.
@Anonymous89279....isn't that the point? Shareholder first. Doesn't matter if employees are in first class or steerage as long as EPS stays on target. We all know which division puts the E in EPS.
Short term: Layoff (mostly randomly at this time to save costs)
Long term: Strategic thoughtful trimming of many bulk functions/operations with decreasing profit margins & eliminate redundancies, tactical faster penetration on new (& still reachable) frontiers like auto, medical etc.
solution for Qualcomm problems : ACQUIRE ARM
QCT will be decimated by Apple and Samsung and there 40% mobile market share running away from Qualcomm chips. The rest of the smaller OEMs in the middle and tiers will favor there Chinese comrades.
Spin the chip division off. End of story.
And that's why you wouldn't need so many employees if the bulk of the future money comes from royalties.
@Anonymous89190, how would a curve of QTL royalty stream on global device sales look plotted against QCT baseband market share? they still pay the toll when using the Shannon modem. It's all about the toll
The interesting thing about Qualcomm is that there were many similar situations for which this has happened during QC's history in which it tried to manufacture some part of cellular technology along side trying to collect licensing deals. In each of those cases, they ended up jettisoning that part of the business for all that some of us older folks remember. There was their QC venture into cellular infrastructure. (QC never made money it in) And eventually they sold it to Ericcsson, along with the employees that worked in that division. Then there was the handset division. QC jettisoned that division to Kyocera. QC has always been able to find a niche market in terms of licensing some if its proprietary technology that came ahead of any sort of standards and incorporate some of it's IP into standards. But when it came to "implementation", there always comes a point during the product lifecycle that things get commoditized when a bunch of "me too" players eventually caught up with a "good enough" solution. QC still has some breathing room in that currently it still has an advantage with some of its technology. But that gap is closing really soon. What I think QC will find out is that a lot of there acquisitions they did so that they can offer a packaged wireless/connectivity solution is now in trouble. QC's selling point was offering the best app+LTE modem and packaging connectivity that was so-so as a packaged deal at a premium an hopes of locking out other suppliers who only sell part of the solution. Samsung just torpedoed that strategy. The implications is that now that Samsung has decided not to go with the package solution, and decided to break everything up, using as many components as they can from themselves and as many suppliers they can. That also poses architectural issues moving forward for QC's platform in that now they have to deal much more with interoperability with other suppliers. So far, Samsung is only using their app processor in their phones. But what's to say they can't supply their app processor to other OEM's in the future, along with their LTE modem to customers in China? QC's only differentiation is if it gets way out in front in offering something that no one else has or can do (like it has in the past), which is increasingly more difficult with standards-driven 5G. It needs to find a niche to play in that isn't standards driven. I'm not convinced "IOT "is it. IOT is marketing buzzword to generate spin. I have yet to see people willingly spend $300+ for a smart thermostat or smoke detector, except for the extreme geeks maybe. QC also needs to make more IP related acquisitions so it can continue its royalty/licensing model. ARM would be a perfect example and they aren't that expensive right now (ok, I'm biased about ARM). Intel will never acquire ARM, and no one else is large enough to acquire it, nor does ARM's business model really fit with the business model of other other chip players, deriving much revenue from licensing/royalty, which let's face is QC is an expert at doing. QC can then get out of the business of competing with everyone else trying to create a low cost app processor, and instead just collect royalty checks for everyone that implements an ARM processor. It's like a war, in which QC ends up being weapons supplier to everyone else that is fighting that war, without having to fight in the war itself. It doesn't really need to care who actually wins the war, and frankly, the longer the war is, the better off QC will be, since a prolonged war with among a lot of people means a lot more weapons sales to everyone fighting.
@Anonymous89178: Read previous post & its discussion “Samsung S6 Also Drops Qualcomm LTE Modem on AT&T phones?” and I bet you can understand what is going on.
mathematical proof of thesis: "QC = AMD. QED". Drops Mic Joins Goldman Sachs
paying the fine and moving on is a real world solution giving defined royalty flow in the world's biggest market. The writing on that wall is good. QTL's profits are real, not virtual. I don't buy that VoLTE isn't royalty generating for QC, so please elaborate how the licensing business will fall apart in the next 10-15 years of 3G/4G (in terms of profit). I don't see any real specifics in your thesis, other than some dubious comparisons to other formerly bigger companies. They all failed in their own way. Speculating on Jacobs motivations isn't even a crackling leaf of information in your forest fire prediction. Will OEMs just stop paying? User base plummets? ASP plummets? Majority of SEP portfolio declared invalid by courts? Activist Judges?
Regarding: "What can Qualcomm really do in this dynamic post-era of monopoly and expired licenses?" 1. Spin off it's chip business into a separate business, that will eventually get acquired by someone else or merge with someone else. 2. Spend $50billion or so and buy ARM Holding and add that to it's patent portfolio. At least, that would make me very happy.
@NotCarnacTheMagnificent: Qualcomm itself “refused to disclose its patent list and included expired patents in its patent portfolio licensed to Chinese licensees” and you want me to list them with their expiration dates in this post!!? Your question itself shows you are living in your virtual world instead of the real world, time to wake up!
http://www.chinalawinsight.com/2015/03/articles/corporate/antitrust-competition/ndrcs-qualcomm-decision%EF%BC%9Aa-warning-to-patent-heavy-companies/
Plese describe every tree, before I will acknowledge it's a forest.
Why do you think Jacobs Jr left and the business of too the dismantling crew?
The handset world is running away from Q as fast as they can, and you can make a volte device without giving Q a dime.
The writing is on the wall, and there is no longer the sort of innovation at the Q to make themselves invaluable, and the clout in Washington and with the FCC is dwindling.
Not that the Q will fold overnight, but history is full of telecom giants who had to cut headcount to one third existing just to survive until someone bigger swallows them, and Q's turn is coming.
which ones are expiring and when? Also, please educate us as to the royalty rates for each OEM, broken down by air interface, and also your analysis of QC portfolio of SEP, present and future relative to other industry players. Also, it would be great to peer into your crystal ball for outcomes of various litigation. Thanks in advance.