Qualcomm has a problem; while the company has increasingly become more diverse in its effort spreading into areas like automotive and Cloud, they are still primarily viewed as a Cell Phone parts company, reducing their potential revenue growth and valuation.
They are far more than now as they move past the entertainment system in cars to autonomy. They are among the essential parts of the next wave of cloud development, hybrid end-point processing to reduce latency, traffic, and cloud server costs. They are also emerging as one of the leading VR AR providers as their technology is being used by an increasing number of headset manufacturers for VR and AR solutions. Finally, they just entered the autonomous Drone market where their ability to provide performance with low power, small size, and low weight may be precious.
Let’s talk about Qualcomm this week and how they are changing more than Smartphones.
Qualcomm’s Smartphone Edge
Qualcomm’s capability is at the heart of its unique ability to build high-performance low-powered parts and wireless networking components. Although this strength was initially defined in the Smartphone market, the critical need for ever-increasing performance and to close the performance gap with PCs while maintaining low energy use and keeping costs low has made their skills uniquely valuable in other markets.
So, while they are expanding out of the Smartphone segment, these Smartphone-based skills are essentially enabling this expansion because these newer opportunities are also power constrained but need a lot of performance. So, rather than being an anchor, Qualcomm’s unique performance edge with an emphasis on energy conservation is uniquely valued in offerings that are energy-constrained.
In the automotive segment, power efficiency impacts the range for electric cars and gas mileage in ICE (Internal Combustion Engine) cars. Qualcomm’s ability to provide the performance needed without the expected electrical power hit is potentially a game-changer as the market moves from predominantly gas driver to electric. This advantage expands as we move from limited Autonomous Car level 2+ systems and start to explore levels 3, 4, and even level 5 alternatives.
Even more than cars, at least those that don’t fly, autonomous drones have a massive weight problem to overcome because they have to lift that weight into the air with electrically powered rotors. These autonomous drones are being developed to deliver packages, medications, and even defibrillators, and some are designed to carry people.
These build off similar technology to autonomous cars but have far higher requirements for low weight and energy efficiency. If they run out of power, they die, as do some people depending on them.
Qualcomm is the core technology provider for the Facebook Oculus 2 headset, the best-untethered headset in the consumer market. This headset is an excellent VR offering with decent performance, relatively low weight, and affordable purchase price. Earlier tethered headsets with a lower performance cost nearly three times as much. With their coming ThinkReality A3 smart gasses, other companies like Lenovo expect to take this performance capability to new levels and even more portability.
This VR/AR collaborative effort promises to deliver unique business and entertainment experiences throughout the decade as more compelling content arrives and this headset technology advances.
The New Hybrid AI Cloud
When we talk about the Hybrid-Cloud, we generally talk about the ability to blend cloud servers and on-premise servers into a more flexible, demand-focused solution. The AI-Hybrid-Cloud is different in that it blends processing power at the edge, the devices capturing the data, with that same central resource. This kind of hybrid potentially lowers internet traffic, reduces the need for additional expensive AI servers, and, due to Qualcomm’s technology, doesn’t significantly increase the power requirements of the remote devices (which are mostly security cameras at the moment).
Qualcomm’s Vision Intelligence program should help these remote devices operate dynamically by using very little power when there is nothing to see and then rapidly ramping up to record and communicate a real problem. The intelligence in the camera not only compresses the data stream it can keep the camera in standby mode until an event emerges and then communicate, often wirelessly, with its host who is alerted to the problem and then can see the video to determine, with low risk, what level of response is required. It could be a game-changer in the home and corporate security space, and the effort could launch new and as yet unknown advanced security products into the market later in the decade.
Wrapping Up: Qualcomm Is Much More Than They Seem
While Qualcomm is known as a critical Smartphone technology vendor, its skills have significantly expanded out of this segment. Now they are a power in the expanding market of autonomous electric cars as well as new ICE (Internal Combustion Engine) cars; they are one of the leading technology suppliers for autonomous drones in terms of drone capability, they are, thanks to Facebook and Lenovo, a top VR glasses supplier, and they are driving a new Hybrid-Cloud segment one that adds AI to the name, as in AI-Hybrid-Cloud that is revolutionizing the Commercial Security Camera space and may eventually move into consumer opportunities and other types of low power, high performance, AI entities working independently to make the world safer for us.
Qualcomm has repeatedly been underestimated, but they continue to execute at a degree in which the Qualcomm of today is very different from the Qualcomm of the past and likely to be very different from the Qualcomm of the future. While they currently may be underappreciated and underestimated, their execution is strong, and they will eventually wake up the market to the fact that Qualcomm is vastly more powerful and capable than folks yet realize.