Qualcomm Succeeds Where Cisco Fails

| About: Qualcomm Inc. (QCOM)

Qualcomm (NASDAQ:QCOM) Streamboost will bring network management to your home wireless broadband. It's important stuff, as tablets and phones increasingly rely on the same shared bandwidth.

The technology, from the company's Atheros chip unit, could cause more people to upgrade their routers from whatever they got at Best Buy (NYSE:BBY) last year or whatever their ISP gave them, to something that's really useful. It may, in the end, reignite a product category that was looking dead.

And there's a lesson there. Because Cisco (NASDAQ:CSCO), which is supposed to be the lead dog in networking, bought Linksys a decade ago, and after a decade of mismanagement is trying to sell it for whatever it can get.

Qualcomm is poised to succeed in an area where Cisco failed. I'd go further than that and say Qualcomm felt forced to move where Cisco refused to.

Cisco felt that consumers wanted plain vanilla products and watched those products become commodities, unable to hold a steady price at retail, as it only followed what standards-bodies were doing. Qualcomm is looking at this through the eyes of a chip company, which tried for years to get its management stuff into Cisco's consumer products and, apparently failed.

The fact that Qualcomm is delivering Streamboost to consumers may be the best indictment yet delivered against the leadership of John Chambers at Cisco. There is nothing earth-shattering about this technology - it has been part of systems sold to hospitals and other heavy users' campus-wide WiFi networks for years. And it will provide enormous benefits, allowing consumers to manage their bandwidth and get more from it, meaning the devices they buy can deliver on their promises.

This is a really big deal for Qualcomm, which until now has mainly focused on cell phone technology, and business-to-business markets. Qualcomm was first known for Code Division Multiple Access, or CDMA, the channel-hopping cellular technology that was first invented during World War II by actress Hedy Lamarr and composer George Antheil. Its technology evolved as a key component inside cell phones and cell towers. But until now it has seldom gone to market on its own, under its own brand.

So why didn't Linksys deliver this to the market years ago? Investors in Cisco need an answer to that. While $100 put into Qualcomm stock 10 years ago is now worth $622, the same money invested in Cisco is now worth $147. That difference is going to keep going up.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.