How Qualcomm plans to take over

this video was sponsored by curiositystream in partnership with my streaming service nebula if you are a smartphone enthusiast like me you probably know qualcomm as the leading chip provider for android phones that is recently being challenged on every front from competitors like mediatek overtaking them in terms of market share to more and more filmmakers like google oppo xiaomi and vivo jumping into designing their own chips too and apple spending billions to be able to replace their wireless modems in their iphones too it would be easy to assume then that qualcomm was heading into turbulent waters but just one look at their share price suggests that investors think quite the opposite at qualcomm's big shareholder conference earlier this month the company explained the quiet revolution it's been going through lately and laid out how that would lead them to explosive growth going forward both in phones and beyond so in the 81st episode of the story behind series let's take a look at what's next for the company and how they got so dominant in the first place [Music] while we mostly think of qualcomm as a chip maker today they're actually a wireless communication technology company at their core it's literally in their name quality communications and the company spent its first 30 years almost exclusively in this field their first big breakthrough was picking up an old wireless technology called cdma and spending millions on improving it to the point where mobile carriers including verizon and sprint for example could build some of the first 2g and 3g networks on it qualcomm cdma tech was revolutionary at the time and quickly established itself as a standard but the wireless industry soon realized that they needed an alternative that a single company didn't control so a huge industry alliance got together and created gsm a much more open and collaborative standard that most of the rest of the world then adopted leading to an eventual duopoly qualcomm continued to invest heavily into various wireless networking technologies collecting over a hundred and forty thousand patents until today but they only really became a company that regular consumers like you and i started caring about in 2007 when they launched snapdragon with their snapdragon chips qualcomm bundled their modems the piece of hardware that is used in phones for connecting to wireless networks together with all of the other major computing components a phone needs onto a single piece of silicon called a system on a chip others made similar smartphone socs too of course but qualcomm being the only chipmaker who also controlled an entire wireless standard had a huge unfair advantage that they were happy to use and abuse pretty much right away qualcomm became so anti-competitive that they independently got sued by regulators from japan korea taiwan china the european union and the united states and all of those regulators found that what the company was doing was at worst illegal and at best just extremely nasty in china qualcomm even felt the need to pay 150 million dollars to the chinese government to avoid serious fines and here's the short version of how their billion dollar extortion scheme worked when a company like qualcomm submits patented technologies to the core of a standard such as cdma they are theoretically legally obliged to license those patents to other companies that rely on the standard such as the hundreds of carriers chip makers and filmmakers on a friend or fair reasonable and non-discriminatory basis makes sense once something becomes a standard other companies have to be able to work with it reasonably but qualcomm had a very aggressive definition of what it meant to be friendly for example qualcomm at some point started refusing or at least severely limiting licenses to all major companies that wanted to make smartphone modems including intel texas instruments broadcom lg and samsung's first attempt at a chip brand before exynos and only gave access to players like via and mediatek that were both tiny when they got their licenses this meant that for years qualcomm was the only major company making competitive cdma-capable modems that all phone companies like apple had to buy flagship modems from at least for cdma markets but most likely for all if they wanted to make global devices better yet for snapdragon android phone makers on the high end had to buy the whole soc from qualcomm 2. since the modem was part of the soc this reliance almost made qualcomm irreplaceable so even when they messed up a generation like they did with the terrible overheating snapdragon 810 the phone companies just had to pick another qualcomm chip rather than going to a competitor not only that qualcomm only sold chips to filmmakers once they signed a massive multi-year licensing agreement with extremely high rates that would even increase if they chose to also ship phones with chips from competing modem makers like mediatek so many companies had to stick with qualcomm for their full portfolio and qualcomm then also threatened basically every major filmmaker out there with immediately cutting them off of snapdragon chips and modems if they wanted to stop their licensing payments or maybe go to court which no company could really afford to risk in other words qualcomm ruthlessly exploited their wireless modem business to prop up their chip business and vice versa until many years later their technology started to become less and less crucial and the above mentioned governments of the world eventually decided to step in and kind of force them to play more fair with this other chipmakers were gradually able to establish themselves with huawei first launching their first modem the 4g capable ba long 700 in 2011 and samsung following them with their first exynos modem in the note 4 in 2014 for example these were small careful steps at first with both companies only initially supplying themselves only in markets where cdma wasn't a big deal and only because they had a massive war chests that they could spend on r d and their legal teams and of course because they had the backing of their own governments so they could slowly chip away at qualcomm's monopoly bit by bit but then even though the usftc's ruling was eventually overturned meaning that qualcomm's business wasn't legally threatened to its core competitors in the mobile space could finally catch up as new standards were passed and the competition finally started getting real apple bought intel's modem business that qualcomm previously strangled to death so they can design iphone modems for themselves soon samsung started selling exynos chips to more third-party companies like vivo and partner up with google to make tensor which is the first non-samsung chip to use an exynos modem of course mediatek is having a huge run lately as it has overtaken qualcomm in a market share and has just launched their first ever proper flagship chip the density 9000 and all the chinese phone brands are reportedly preparing to launch their own chips too qualcomm still has a lead over many of its competitors because of the many years of damage that they have done through the industry so they're probably gonna stay on the top of the android flagship range for a couple of more years but competition is well and truly on the way now and yet investors seem excited about the company's future so let's talk about why the easiest explanation for qualcomm's new boom is actually that they got lucky both in the smartphone business and beyond huawei and samsung the two companies that had significant in-house chip businesses for their flagship phones are both on the decline for political and economic reasons and taking their place are mostly chinese players like oppo vivo xiaomi realme etc who are starting to capture the premium segments from them all companies who don't have their own chips yet and will likely buy from qualcomm for the next few years at least combined with the fact that 5g chips are on average about one and a half times as expensive as 4g chips were and it looks like on the near term qualcomm isn't actually going to make more money from flagship chips than it did in the past clearly there is a somewhat temporary position though and we can actually see that qualcomm is preparing for the inevitable future where they will actually have to compete by looking at their marketing unlike other chip companies such as intel who spent billions and decades on marketing campaigns and mandatory laptop stickers and whatnot qualcomm spent very little because so far they didn't see the need most filmmakers in the past didn't really have the choice of not buying a snapdragon processor for most of their phones so qualcomm didn't really feel the need to convince consumers that their chips are great but now that is changing and surprised they made a weird special edition phone that only exists to be a conversation piece the company is constantly talking about building up a snapdragon insider's community they are suddenly sponsoring a ton of tech youtubers to talk about them they are pumping out long deep dive sessions with youtube experts of course they are also hosting probably the most over the top tech events of the last few years in the form of their hawaii launch events where all the media is flown out into fancy resorts and whatnot in fact there should be one of those in a couple of days again and they're actively working with phone companies to ensure that snapdragon is highlighted as a selling point on their promo materials as well now their marketing still sucks so i wouldn't blame you if you hadn't noticed their increased efforts but they are definitely trying their management has admitted that it is a priority to turn snapdragon into a real consumer preference in a couple of years probably by the time all the competition really kicks in but even beyond phones qualcomm actually has a surprisingly bright future because the core technologies that they have developed for the smartphone industry have also become surprisingly useful in a ton of other new industries as well that many of which are expected to have explosive growth going forward apple has proven that arm-based chips can be great in pcs and qualcomm is perfectly positioned to turn their snapdragon chips into desktop competitors as well we know they had an exclusive deal with microsoft to kickstart the development of windows on arm and they have recently also bought a company called nuvia this team is led by the former mastermind of all the apple chips from the a7 to the m1 and qualcomm announced that they will use their tech to improve their windows chips in the future to catch up with apple meanwhile 2021 was the year vr finally took off too with the quest 2 selling over 10 million units and facebook announcing that they will orient their entire company to push the category forward hiring tens of thousands of employees and spending billions turns out snapdragon chips already power over 90 of standalone vr and ar headsets and that's the category that's expected to see by far the biggest push similarly cars are growing huge touchscreens they're getting connected driving features and over-the-air updates and need vision systems for assisted driving guess what a snapdragon chip can theoretically do all of that and qualcomm has just signed on bmw as one of their first trial customers handheld gaming is on a huge rise with the nintendo switch and the steam deck as well which i bet qualcomm will soon get into with relative ease and then there are tons of other markets like connected cities industrial iot and home broadband powered by 5g that are all going to need a gajillion small always connected and power efficient chips in the future simply put while snapdragon chips in the past could really only go into smartphones in large quantities suddenly there's a ton of new markets that are opening up for them so even if qualcomm doesn't end up dominating each and every one of those device types as thoroughly as they did with the smartphones the total addressable market still got so much bigger that investors they're excited anyway all right and to finish up i'm happy to announce that episode 3 of technorama has just been released technorama is my huge nebula original series discussing how technology is portrayed in movies and in this episode we take a look at how media became the dominant villain in cinema starting in the 90s exploring the most iconic movies and their historical political and technological context i think it turned out even better than the first two episodes so i hope you will enjoy watching it as much as we enjoyed creating it nebula is of course the video streaming service that i and many of youtube's educational creators have built for ourselves it hosts all of our videos ad free without tracking and often even with early access as well as dedicated high quality originals that couldn't really go on youtube like my technorama series or those from tons of other creators like wendover productions real engineering and more the best and most affordable way to get nebula is in a bundle with our partner curiosity stream that lets you get both services for a full year for less than 15 bucks that is less than many streaming services charge per month curiosity stream is of course the premier place on the internet for high quality documentaries they cover history science nature technology anything you can make a documentary about and the series that i would recommend to my audience from their catalog the most would be engineering the future it's a great overview of the disruptive technologies that have the potential to shape our future so check out the bundle at the link in the description and i'll see you next friday you

Channel: TechAltar

Views: 189,544

Keywords: Qualcomm, Snapdragon, wireless, wireless tech, CDMA, GSM, standards, FRAND, Verizon, 5G, 4G, 3G, 2G, modem, RF, radio, monopoly, antitrust, Snapragon 888, Snapdragon 8 Gen 1, Hawaii

Id: lFPnY39Ob_c

Length: 13min 9sec (789 seconds)

Published: Tue Nov 30 2021