The US chipmaker is banking on innovative technology to stay at the vanguard of the data revolution in India
Two years ago, after the country’s leading CDMA operators — Reliance and Tata Teleservices — decided to hedge their bets by climbing aboard the GSM technology bandwagon, analysts wrote the epitaph for US telecom giant Qualcomm and its domination of CDMA technology.
But, the US giant is back with a vengeance and positioning itself to be a major player in the coming data revolution with the launch of 3G and broadband wireless access (BWA) services. To the uninitiated, 3G will offer data speed nearly ten times faster than GPRS (3.2-7 mbps). BWA can support new technologies like long-term evolution (LTE), which offers speeds of up to 300 mbps. But, this technology will see large-scale deployments only by the end of this year.
So, why is Qualcomm so bullish? “The data revolution, like the voice revolution through 2G, is about to happen. And we are looking at leadership in this space with an array of technologies,” explains Kanwalinder Singh, President of Qualcomm India. The industry estimates that at least 30 per cent of the current 3G-ready mobile phones run on Qualcomm chipsets — the heart of any mobile phone, which constitutes 15-20 per cent of its cost. Now, the US giant is creating technology to make 3G phones cheaper, thanks to a bevy of patents.
But its aggressiveness is not limited to 3G. In order to push LTE technology, Qualcomm successfully bid and won spectrum for BWA in a cut-throat auction war in four key circles at a cost of a staggering Rs 4,912 crore. It is also developing chipsets to ensure that by the middle of next year, mobile phones can move seamlessly from 3G to LTE networks.
Competitors say that unlike CDMA, where Qualcomm has a near monopoly over chipsets and technology, in LTE it is just one of the key players and therefore cannot dictate price. Says a senior executive of a leading European equipment maker: “There are some seven companies that make LTE chipsets, so Qualcomm cannot have a dominant share of the market. Similarly, in 3G, there are a whole host of chipset manufacturers and it is competition that is reducing prices, not Qualcomm.”
Singh thinks data use will largely be via smartphones and devices like tablet PCs rather than the desktop, and is therefore concentrating on lowering prices. “We wanted smartphones to be priced below Rs 10,000 from about Rs 20,000 some years ago. Our other target was to bring down 3G feature phones to below Rs 5,000 and dongle prices to Rs 2,500 before the 3G rollout.”
That is an ambitious target — and one that can only be met through collaboration. In the arena of smartphones, for instance, Qualcomm has tied up with HTC to offer a smartphone for under Rs 10,000 to Bharti Airtel subscribers. These phones use an advance 3G technology called HSDPA and can offer speeds of up to 7.2 mbps.
For 3G feature phones with speeds of 3.2 mbps under Rs 5,000, Qualcomm has joined hands with companies like Micromax and Spice Mobile, which already offer these products. Of course, the number of such phonemakers will only increase with time. More importantly, says Singh, Qualcomm is now aiming to reduce device prices by another 25 per cent while still integrating more functionality.
Qualcomm is also skipping older technology for India. So, it will not sell Release 99 chipsets, which sustain data speeds of only 384 kbps, even though mobile phones with this technology will be cheaper. In India, the base-level chipset will be based on HSDPA with a minimum speed of 3.1 mbps.
Mobile phone makers are certainly hoping to leverage from collaboration. Spice Telecom, for example, is working on a mobile phone equipped with a Qualcomm chip of 1 Gigahertz of processing power. “This will give consumers immense speeds for downloading and we will sell the phone at below Rs 20,000,” says Anuj Nangia, vice-president of Spice Mobile.
The more challenging task is to offer a tablet PC to take on the Apple iPad on price. Qualcomm and Spice have developed a new product priced at Rs 25,000, which is cheaper than the iPad and is packed with several extra features. Also, Spice says Qualcomm is collaborating to design new phones for the company.
But, it is not only 3G that is engaging the US company’s interest. Qualcomm is also backing LTE, the technology fighting a bitter battle with WiMax for supremacy in the wireless broadband space globally. The San Diego-based Qualcomm is investing huge sums on developing a chipset that will seamlessly move from a 3G to LTE network. It is expected to hit the market by the middle of next year.
India, of course, is the new battleground on which technology is eventually chosen. And Qualcomm might just have backed the right horse. In India, for instance, the big boy of BWA — Reliance — which has spectrum in all 21 circles is veering towards LTE and experts say everyone else will also move in the same direction.
# Cut price of phones by tying up with manufacturers
# Bring down price of 3G dongles to under Rs 2,500
# Reduce cost of chipset — the heart of a mobile phone
# Come out with tablet PC for around Rs 25,000
# Push high-speed LTE technology to 3G operators
# Sell chipsets that support at least 3.1 Mbps speed
Qualcomm has also devised an innovative strategy. The company believes that 3G networks will become congested in a year or two, especially in central business districts due to a massive increase in data use. So, operators will require more spectrum and new technology. That is why Qualcomm has taken BWA spectrum in Delhi, Mumbai, Kerala and Haryana, where it expects congestion to hit first.
“We will offer LTE spectrum in these circles to 3G operators whose networks have become congested. Our goal is not to operate BWA services, but to collaborate with 3G operators so that they can offer customers high data speeds seamlessly by moving from 3G to LTE if there is congestion,” says Singh. Qualcomm will make money by selling the chipsets.
Qualcomm might not have a monopoly over technology now, unlike in CDMA. But the sheer size of the growing market has ensured that as long as it can innovate, it will survive and make good money.