Qualcomm CEO Cristiano Amon gave the keynote speech at IFA 2022 this morning in Berlin. IFA is Western Europe’s largest consumer electronics and home appliance trade show, where appliance manufacturers announce many of their new products just in time for back to school and the holidays. Qualcomm has used this year to make some major corporate announcements that I found interesting in that they reinforced that Qualcomm is the consumer device maker’s best technology bet to compete with Apple. I will list the news and then provide analyst commentary on it.
Qualcomm made three major announcements at the show – one with Meta, one with Bose and one about smartphone satellite communications. Here is the version information:
The the companies have entered into a multi-year agreement in which Meta uses the Snapdragon XR platforms (hardware + software) for the Meta Quest platform. Meta and Qualcomm also agreed to “deepen technical collaboration” for next-generation platforms and core technologies. Meta’s CEO made a three-minute appearance to usher in the deal and publicly show his support.
This announcement is interesting in many ways. I believe this solution uses standard Qualcomm XR silicon, is not proprietary but is highly strategic. Meta has a silicon team working on XR devices, and I think the company realizes it needs some extra firepower to successfully take on Apple. I’m glad to see a custom platform and not custom silicon like Meta can differentiate, but Qualcomm can leverage its resources and economies of scale better. It will be interesting to see how Meta redeploys some of its silicon resources. Meta has a giant MR vision and is also dedicated to devices like Portal, lots of silicon to work on. It would have been great if Zuckerberg showed up in person, but he doesn’t do much of that.
Bose has agreed to use Qualcomm’s S5 Audio SoCs in its future high-end earphones, headphones, speakers and soundbars. Bose CEO Lila Synder said she wanted to “raise the bar for consumer audio experiences” and “push the boundaries of what’s possible.”
Bose has lost market share to audio device brands Beats (by Apple) and Apple and obviously sees the value in Qualcomm to reclaim that share. The audio market has changed in recent years. Connectivity and management to and from other devices and services is imperative and drives purchasing preferences. Think about the criteria you used 20 years ago when buying a home audio solution versus today. Today you want this speaker to play content from any device, any cloud music service and the speakers to communicate with each other, maybe even tell those speakers -speakers what to do and play.
Satellite communication capabilities
Although not tied to any partners, Amon announced that it is working with ecosystem partners, including satellite companies to bring satellite communications to the world on your smartphone. He said the company would enable satellite communication capabilities in high-end phones with the Snapdragon Modem-RF system. Last week, T-Mobile and SpaceX made a announcement this would allow the “vast majority” of smartphones already on T-Mobile’s network to connect to SpaceX Starlink satellites.
None of this is a coincidence. Qualcomm is probably the smartphone and RF modem behind the T-Mobile/SpaceX capability, and I believe also behind Apple’s iPhone 14 which should enable the same capability. Qualcomm is not new to satellite communications. The company designed the Globalstar air interface and launched Omnitracs, a satellite-based system for tracking trucks.
I see a lot of value in satellite systems to fill in the gaps where cellular may just not make sense to the carrier. 5G can’t be everywhere, but when you need to text and in the future there’s the possibility of data and voice, it’s a good option. For example, I will visit Lake LBJ, which is only 40 minutes from downtown Austin and there is no 4G or 5G connectivity. I wish I had this capability right now to text if something happens and not require WiFi.
Qualcomm is in the midst of expanding its portfolio into IoT, RF and automotive while continuing to invest in its smartphone franchise. It’s going well, to say the least. The IoT ($8 billion business), RF-FE ($4 billion business), and automotive companies ($19 billion backlog) are experiencing parabolic growth, and Qualcomm is gaining content and profit through its high-end Android smartphone strategy. To run this expansion at a lower cost, it relies on key IP building blocks such as CPU, GPU, Video, AI, XR, DSP, Modem, RF-FE, I/O and many software stacks in these new areas. I always thought the challenge for Qualcomm was to leverage but be good enough to displace many category killers or in-house designs.