Qualcomm is known for inventing CDMA and dominating the global mobile chipset market, but one thing you might not know about Qualcomm is that it was originally in the long-haul trucking business.
After Qualcomm was founded in 1985 its first big product was a satellite-based messaging and tracking platform called Omnitracs. It wasn’t until the next decade, that Qualcomm built the first CDMA cellular base station – using the technology it derived from Omnitracs – and set the stage for it to become one of the most dominant mobile technology companies in the world.
On Friday, Qualcomm announced it was selling its the Omnitracs business unit to private investment firm Vista Equity Partners for $800 million. Since 1988, Omnitracs has evolved into a sophisticated fleet management, vehicle applications and logistics business that supports the trucking and related industries in the U.S., Canada and Latin America.
I’m a bit of a softie when it comes to telecom history, so it’s a bit of sad day. It’s not every week that a company sells off its original business. It’s also interesting to ponder that the companies we now consider the giants of wireless industry used to be in entirely different businesses altogether. Nokia previously was in the paper and rubber business. (There is still a company called Nokian Tyres).
Vehicle telematics isn’t that far from Qualcomm’s core competence today, but selling it makes sense given the company’s overall strategic goals. Qualcomm is primarily an enabling technology company: it sells the silicon and licenses the intellectual property that makes wireless networks tick to infrastructure vendors and device makers, who in turn sell their gear to consumers, enterprises and carriers.
Qualcomm has never been shy about launching end-customer-facing businesses in the past. It made cellular networks and even mobile phones. It tried to sell mobile broadcast TV through FLO TV, and it built up its own feature phone operating system and app stores with BREW. Qualcomm was trying to jump-start markets for its technology so it could license its intellectual property and sell its chips. FLO may have failed, but it certainly managed to build a huge market for CDMA and wideband-CDMA (the technology HSPA is based on). In 1999 it sold its networks business to Ericsson and its handset business to Kyocera in 2000.
Omnitracs is primarily a enterprise services business, and though Qualcomm held onto it far longer than any other venture, CEO Paul Jacobs probably felt it was time to let go. Fleet management was a nifty niche business for Qualcomm, but the bigger opportunity in vehicle telematics is now in consumer vehicles as Audi, GM and other automakers look to embed LTE directly into their cars.