In my overview of Qualcomm’s (QCOM) fiscal second quarter 2008, I mentioned that the company’s broad range of mobile products positions it to exploit the cellular boom optimally. Before we look at the products themselves, it is illustrative to first peek into a few aspects of the mobile market that Qualcomm addresses.
According to Strategy Analytics, the mobile handset market grew 12% y-o-y while CDMA-based handsets (includes CDMA2000, WCDMA, EV-DO, HSDPA) grew 26% y-o-y. It is forecasted that by 2012, there will be about 1.6bn 3G subscribers in the world. The 3G goldmine, being CDMA-based, presents Qualcomm with an opportunity to monetize on every phone using these technologies. (You can find more on this topic here and here.)
While Europe, Japan, South Korea and the U.S. continue to migrate rapidly towards 3G, emerging markets such as India, China and Latin America present equally bright opportunities for CDMA vendors. The challenge is to cater not only to the elitist user in the traditional markets, but also to the utilitarian consumer in the emerging markets looking for low-cost feature-phones.
Mobile computing and data will also be future growth drivers. As wireless networks mature, and convergence devices start to permeate the market, computing on-the-go will become a staple. Data-cards for high-speed broadband in the mature 3G markets will be an important component. Complementing this is the market for embedded broadband modems in internet-ready laptops.
Mobile computing not only opens up the opportunity for broadband modems but also for the core chipset itself. The challenge will be to make smaller, lower-power processors. Intel (INTC), for example, is targeting this market with its Ultra-mobile PC and the mobile internet devices [MID] market. The company hopes to revolutionize computing through the MIDs for the mainstream market targeting social networking and location-based services among other things. Apple (AAPL) recently acquired PA Semi signaling its seriousness about convergence devices. As the mobile-phone packs more and more features and laptops become more nimble and mobile, the so-called convergence devices, as signified by such industry events, will emerge as the future of communications.
For Qualcomm, each of these product areas presents opportunities that can steadily grow its revenue. The company not only stands to make money on its own chips, but also for every CDMA-based chip sold in the coming years. Apart from the areas mentioned above, Qualcomm will also benefit from its portfolio of connectivity solutions (GPS, Bluetooth, mobile TV, and to a certain extent, WLAN.)