Qualcomm’s Incubator Will Invest Millions In Consumer-Facing Projects

Qualcomm Services Lab launches with four companies

Inside the walls of the San Diego-based company, Qualcomm (NSDQ: QCOM) has started an incubator to come up with consumer services that could either drive big revenues or spur sales of the company’s core products found in many next-generation mobile phones.

The 10-month old stealth operation is being unveiled today, along with four of the eight projects which have already received millions of dollars in funding. Qualcomm Services Lab signals a small shift in the way the technology behemoth is doing business. Rather than seek traditional partnerships with carriers and OEMs — as was standard in the business for years — it is going direct to consumers for validation of its ideas. The investment is a long-term bet for the company with returns coming in the next three to five years, if any at all.

Most of the eight projects have come from ideas within Qualcomm with the exception of one which was brought on board through the recent acquisition of Tapioca Mobile. Isaac Babbs, the VP of the Qualcomm Services Labs, said the companies are 100 percent owned by Qualcomm Services Lab, a wholly owned subsidiary of Qualcomm. In practice, they’ll act like startups and will receive funding through rounds of capital allotted at certain milestones. Babbs declined to say how much has been invested, so far, but that generally the first round can range between $1 million and $4 million. Most companies have about two to eight employees. The program is different than Qualcomm Ventures, which invests in external startups.

The Labs are designed to move much faster than Qualcomm normally does with 16,000 employees. Having incorporated officially in November 2009, it started ramping up in February and March, and already has made eight investments. “Qualcomm has a long history of innovation, but the market has changed, and a lot of our traditional partners, like carriers or OEMs, want to see that you have traction before you launch anything. That

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