Qualcomm's Paul Jacobs on the future of wireless technology (and patent disputes)January 10, 2008: 6:00 AM ET
By Michal Lev-Ram
LAS VEGAS -- Paul Jacobs got his start in a robotics lab in the south of France. Now he runs Qualcomm, one of the world's largest wireless technology companies. Fortune sat down with Jacobs at the Consumer Electronics Show in Las Vegas to talk about the future of wireless services like mobile TV, 4G technology and Qualcomm's recent legal troubles. Late last month Qualcomm suffered a significant setback when a federal judge barred the San Diego-based company from selling chips that infringe on patents held by chipmaker Broadcom's (BRCM).
Let's talk about MediaFLO, your live mobile TV standard. I know Verizon (VZ) has already launched it and AT&T (T) has signed on. Are you happy with the progress you've made so far?
It's like any service, you'd like to have more people on the service as quick as possible, more devices out there and more content. It's like any new technology -- it takes a little while before things start to take off. Plus, there were a lot of things we had to do to get it running. We had to get a lot of rights cleared for it. It really wasn't just about getting a technology going, it was a much broader ecosystem that had to be built up. It's moving along but, like anything, you always want to go faster.
What was the thinking behind developing yet another mobile TV standard?
The genesis was looking at doing broadcast TV over the cellular network. We realized you couldn't really do it economically, so we said, how about we start with a clean sheet of paper? How do we build something that really will provide great multimedia and very high quality video at a fairly inexpensive price? That's why we decided to start from scratch. And, in fact, when we started it, it wasn't the case that there were other competing technologies for broadcast out there. That kind of came as we were doing the development of MediaFLO. I think we felt like we could do a better job.
What's your take on the different 4G [high-speed cellular networks] technology standards and when do you think we'll see mainstream adoption of 4G in the United States?
Obviously Sprint's (S) talked about rollouts of their service starting in the end of 2008. But the WiMax technology that that's based off of hasn't really been developed specifically for mobile use -- it doesn't handle handoffs [transferring calls or data from one cell tower to another] and streaming as well as I would say the next version of it should. Then there are two other technologies: There's LTE [Long Term Evolution, a 4G standard designed for GMS networks], which Verizon recently said they'll look at as one of their paths going forward and there's the UMB [Ultra Mobile Broadband] technology that we worked on. We will be able to roll out chipsets and infrastructure for UMB in the 2009 time frame. But for the most part, I think you won't see mainstream, major adoption of 4G technologies until a few more years. As with any of these technologies it takes a little while to get through the teething pains and really get it up into the large volumes.
In the past Verizon has been a reliable proponent of your technologies. What kind of impact does Verizon's decision to embrace LTE have on Qualcomm (QCOM)?
We developed a lot of LTE technology as well. Early on we had been working on various technologies that go into LTE, so we have a lot of intellectual property in it. Plus, we make chips for all different technologies, so we'll make chips that have LTE in them as well. And really from our core business standpoint, it's not that big of a difference which technology they chose. For us it's just another opportunity to put some more tech into the chipsets. Sure, we prefer the technologies that we've done all of the system design for, but, in fact, all of these technologies have aspects of our designs in them.
Are you still hopeful about the prospects of UMB?
We're doing trials with other operators in other countries, so I think there's still an opportunity for it.
You've been involved in several patent disputes recently. Most recently there was an injunction against several Qualcomm products that were found to infringe on Broadcom patents. What kind of impact will that have on the company?
We announced that we have a set of chips where we've actually designed out the [infringing technology]. There's a short-term impact on us and our customers in switching those customers from the chips that they were using to these new chips. We believe that we'll be able to have those handsets on the market before the end of this quarter. So there is that short-term impact, but we believe that we'll be able to mitigate it by the end of the quarter. In the medium term there were some products that were in design that we have to make some modifications to. In the long term they had this sunsetting period as part of the injunction which said that we could continue to sell certain products for a certain period of time. We have that time frame by which we have to do a full design-around for some of the other patents. It's really just a question of getting clarification from the court in time so that we can get the design-around done.
What are some things you think we'll be doing with our phones five years from now that we're not doing today?
One of the things that's exciting is we have this new microprocessor technology that's got about 10 times better power consumption than the existing thing you have in your laptop. I think we're going to see people doing a lot of computing in a device that's handheld and pocketable. Obviously entertainment is going to be big, and there's 3D gaming, data services and music services. Then there's navigation. I think we'll see some interesting combinations with that and services that already exist on the web. And over time, you'll see the phone take more and more of a role in mobile commerce.