Qualcomm has agreed to buy chipmaker Atheros in a deal valued at $3.1 billion, which will create a networking powerhouse that spans the cellular, home, smart grid and sensor networks. As I wrote yesterday, this is an unusual and important deal for Qualcomm that helps it expand from the cellular world to myriad other networks. It’s also an indication the Wi-Fi has won, and in doing so has changed the game for device makers, carriers and even consumers.
Qualcomm’s Steve Mollenkopf, EVP and group president, in an interview with me this morning, explained Qualcomm’s vision of a networked world centered on a phone, with the phone able to communicate seamlessly with a multitude of networks. But in order to make that happen, Qualcomm had to go shopping. The company will now need to create a platform and software that makes it easy to move from network to network without changing passwords, losing access to content or even being aware of what network the phone is on. Mollenkopf pointed out that Qualcomm has seen the advantage of owning the radios at both endpoints in the cellular world and how it has enabled the company to both deliver a better product for operators but has also allowed Qualcomm to influence the roadmap for cellular technologies. Now it wants to do the same for routers, PCs, set-top-boxes, M2M networks and any other device that will have a radio.
“As the cell phone markets open up and new segments open up, the tech company that can deliver an end-to-end systems solution that is controlled by the phone can influence the tech perspective and drive the market more effectively,” Mollenkopf said. “We’re excited because we now have a broad basket of technology, not just the phone, but technology that goes outside of it as well.”
As a consumer, that’s an exciting prospect, not just because your phone would move between networks more easily, but because mobile devices might soon have the ability to authenticate a person on the network no matter where he or she is. In that scenario, someone could watch television content from his cable provider on an iPad in a cafe with both the cable company and the content’s owner knowing that he has a Comcast cable subscription. Or medical information could travel over networks in a way that ensured security and possibly even quality of service for important data.
The most important protocol in that network will be Wi-Fi, which is why Atheros, an early Wi-Fi company, is so important for Qualcomm. Other radio standards won’t go away (Atheros makes chips for many of them) and Qualcomm will likely begin offering even more highly integrated chips that combine application processors, cellular radio technology, Wi-Fi and other flavors. Mollenkopf mentioned that even cellular operators will rely more on Wi-Fi as they deploy their 4G networks, to meet the demand for bandwidth while saving their scare spectrum resources. For example, Towerstream said it has seen days where usage on a single metro Wi-Fi hot zone in Manhattan has exceeded a terabyte of traffic.
However, will Qualcomm’s “end-to-end systems solution” for networks split the Wi-Fi market (or markets built around other standards-based radio protocols)? Qualcomm’s vision of owning the radios in all of the endpoints is easy when dealing with carrier customers, but more difficult when consumers can buy any number of products and variations of Wi-Fi, or HomePlug or Bluetooth off the shelves. Mollenkopf assured me he doesn’t want any sort of split in already existing standards, but in order to achieve his vision of a unified platform, Qualcomm will undoubtedly develop some intellectual property to make the needed transition and recognition between networks a seamless experience. And Qualcomm doesn’t just give its intellectual property away.
It does license it, which means that if Qualcomm can use its expertise (look at how it created the Gobi platform that allows cellular connectivity across multiple carriers on one wireless card) and its Atheros buy to build a sort of DLNA type standard that allows devices to talk seamlessly across different networks then it could rake in the big bucks as we detach more and more objects from their wires and embed connectivity into ever more obscure gadgets. Mollenkopf said, “I think there are issues around how do you fix something and who do you call when there is a problem. It’s a simple idea, but if you can deliver that type of platform, it becomes important in the industry.”
He points to Gobi as an example in which Qualcomm has worked in a vertical way to provide a platform for the industry without causing fractures in the market, and said the Atheros buy allows the combined company to do that in a horizontal manner. That’s clearly a much taller order, but with this acquisition and Qualcomm’s vision, the idea of a unified and seamless network could be closer at hand. As the network rises in importance, Qualcomm wants to give every piece of it on the consumer side a sliver of intelligence (and maybe even an application processor in items such as set-top-boxes or residential gateways) and take a cut of the licensing revenue in return. That’s an audacious goal, but Qualcomm has never shied away from thinking big.
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