'We are working on Interoperability between GSM & CDMA'

Irwin Mark Jacobs, chairman and CEO, Qualcomm, was recently in India to sign an agreement with Reliance Communications for buying equity. Jacobs has been instrumental in the development and commercialization of CDMA worldwide. The year 2002 has started on good note for the company, as Qualcomm made inroads into India and China, the two largest cellular markets. In an exclusive interview Jacobs talks to Pravin Prashant about CDMA, its association with India, and Qualcomm's future strategy. 

How do you look at CDMA technology in comparison to other wireless technologies? 

CDMA provides the highest capacity, highest quality voice and data communications, and utilizes spectrum efficiently. Though GSM and TDMA-based technologies have been widely used but with some problems. CDMA also supports much higher data rate and thus lowers the per Mbps cost for the customer. So it is clear that CDMA is a superior technology.



What is Qualcomm's vision about CDMA?

Right now, we have got a very good base for continuing to grow CDMA activities. We have made some strategic investments, one of them is our investment with Reliance in India, to help move the industry, CDMA business area and help it to expand more rapidly. We are very much focussed not only on new technologies that provide more efficient and high-quality voice but also support data activities. We intend to expand the number of applications and the number of people developing new applications, such that these applications can be downloaded in the phones, allowing more and more usage of data. As people use data, the system will expand further and CDMA will continue to evolve. 

We have the next revolution coming along, which is the 1xEV-DO, the 2.4 Mbps version. We will continue to add various capabilities to our chip and software. The another area of focus is of providing interoperability. For e.g., at present, there are a large number of GSM users in the world. For the next decade, the total number of GSM users will continue to remain large even though operators switch over to WCDMA or CDMA 2000. So we want telephones that will provide CDMA 2000 and WCDMA if that is available, GSM where it is available paving way for multimode, multi-frequency band phones. We are currently developing those chips and software and expecting it to enter the market place sometime in early 2003 and that will allow worldwide roaming without significant complication to the user in terms of ease of use and expense. 

What is the status on next generation CDMA technology-- CDMA2000 1xEV-DO? 

CDMA2000 1xEV-DO is data only or data optimization standard and is very well complete as far as ITU is concerned. We have been operating this standard in San Diego for almost three years from now and we are beginning the commercial deployment of the technology during the Football World Cup in Korea and will support high data rates at 2.4 Mbps. So if one delivers packets at high burst rate, one completes the first application quickly and moves on to the next application thereby lowering the cost. Few years ago, we thought for providing higher data rate one needed to go for a wider bandwidth but with 1xEV-DO we have much higher performance because we came up with additional algorithm that allows us to occupy some data and so we feel very competitive. 

Do we see in future dual mode phones catering to both GSM and CDMA technologies? 

No questions. First of all with WCDMA, since it is going in a new spectrum everybody recognizes that it should get commercially launched in good shape. So, for WCDMA you need dual mode, dual frequency bands phones which allows you to have complete connectivity. We have been working on putting GSM and CDMA-1X on the same chip and providing software to support those and therefore have world class phones that can operate either in CDMA or GSM. The software will allow that to be curbed without having the user to be concerned about it as it would be the best way to provide worldwide roaming. We will then extend that to WCDMA chips. The earlier standards will always be allowed because it take many years before people stop using them so one always need to have multi mode phones and multi-band phones. 

How much does Qualcomm spend on the R&D? What are the specific areas Qualcomm is focussing on? 

Fifteen percent of Qualcomm revenue goes into R&D. The fund is not only utilized for developing technology but for working on standards. We build the chips that provides all types of capabilities. But I think one of the exciting aspects of the wireless world is the next generation technology which are already in commercial use in Korea, and will enter commercial use in US and India which will support data rates initially at 150 Kbps and 300 Kbps and will do it very cost effectively. This is going to open up whole set of applications for e.g. the chips will be able to decode music, decode pictures, and decode movies. 

We have currently completed research whereby phones which would be sold will have a GPS system as the same chip has a global positioning system receiver which is being added to the phone at a very small additional cost. It will not only open up ability to respond but also help in emergencies for knowing the exact locations and a range of other applications such as downloading of maps that are specific to the current location and allows one to find the direction or asking where the nearest fuel station thereby helping commerce. With these capabilities what we done is developed a layer of software that is on top of our chips and is being used by many manufacturers. The layer of software is called BREW. With BREW developers in any country and particularly we expect many here in India can develop whole range of applications which can be useful for education, business, and games. We certify those or we put a digital signature on them so we know that they don't get changed and they than can be downloaded by users of handsets as desired. This opens up whole new business area whereby they can be uploaded and replaced by other applications as they are approved or in fact in case there is a problem. And so we see that with our continued support to the data capability of wireless phones. 



We are working on lot of areas and the ones that are most obviously going to be helpful is the global positioning system. A whole variety of capability is being added to the chip which are put in the handsets to handle pictures, to handle movies and to handle audio capabilities. In some of the phones we are adding Bluetooth and 802.11in the same chip. So, the phone will have varied capabilities which will take another five to six years. There will be evolutions in the technology. Presently, one of the ideas that came up in my discussions in India had to do with TV sets. There are more TV sets in India than number of telephones. So clearly people in India value TV. Well if you think about using a telephone for an Internet device and provide a capability for the phone to talk to equivalent to the TV set perhaps with a channel number then you can use the TV set which is widely available as a large device for a whole host of applications and I think we are going to take a look at that as well. You can never tell up when somebody's idea come up and that should be tried. 

Can you throw some light on the status of your patents?

Qualcomm strategy right from the very beginning was to be an innovative company which can come up with new ideas and not just make small improvement but come with significantly new approach, develop it rapidly, bring it to the market, manufacture in some cases, and in many cases develop the chips and the software whereby others can manufacture the final product. This is the path that we have taken ever since the beginning of the company and we will continue to be on that path. As part of that we clearly do develop many products. We have got a very active program in taking up these new ideas and incorporating them. I think in case of CDMA we have a well over 1,000 US patents and then these patents are applied for and reissued in many countries around the world so a large multiple on that will be foreign patents and we continue to develop many patents ever year. 

Qualcomm is a monopoly player in CDMA space, do you feel that this is bad for the industry?

Right now we are not a monopoly as we have licensed over a 100 companies to manufacture CDMA equipment. These companies are also licensed to make their chips and manufacture their own software. What Qualcomm does is to work very hard to develop better chips more quickly, less expensive with high reliability and then hopefully sell it to many manufacturers who are planning to use our chips. So we don't relax in our efforts and stepped up development and do it with high quality in order to have a larger market share. And having said that it is very hard to maintain high market shares so there will be other competitors who will come along and try to compete with us and I am sure they would have got some part of the market. We work very hard and allow many others to compete and the question is we compete better. 

How do you want to leverage your association with India? 

We definitely see an application center or development center whether it is Qualcomm owned or whether we cooperate with somebody else on that is still open. But I think we will almost immediately begin to have courses and development meetings, so that we can help the developers understand how to prepare the applications and then if needed go for a permanent type capability. 

The software industry will make use of wireless Internet and also will be a major source of applications for use in India as well around the world. So, we want to encourage that work for the people and try to make it happen even sooner. 

Do you believe chipsets will continue to drive revenue for Qualcomm? 

Yes, I expect that. If you look at the CDMA part of our business, the chipsets will be a major revenue source and some of the new software application based on BREW will also be an interesting source of revenues as the use of wireless grows. One of our focus is try and come up with new innovations, new ideas, develop them and bring to the market quickly. In our case one way to bring to the market is by introducing them to our chipsets and adding some software on the top of the chipsets and giving them ultimately to the manufacturers.

How do you see Qualcomm's future? 

I think it is going to continue to be a very exciting company again this whole area of digital communications plus computers bringing in multimedia, the digital cinema are just many opportunities. We have a very large cash capability of over US $2 billion, a strong balance sheet, and a pool of many well trained engineers, and a wide pool of patents. Even though we are already a large market cap company it is still more as a start up that is well funded and therefore can be very exciting. 

What are Qualcomm's plan to counter competition from companies like Texas Instruments and Intel? 

I think this validates the fact that this is a very exciting industry. The coming together of wireless communications, computing, and software applications clearly will attract other very capable companies. We thrive on competition and without competition, one will tend to get a little stale. One has to just continue to run faster and faster and come up with new ideas and bring them to the market. We will try very hard to do that and if we try to relax than other companies will like to buy us so we have to keep working very hard.