Qualcomm isn’t a company that’s afraid to make big investments in promising, if sometimes unproven, new technologies. It has invested in various ventures ranging from its Flo TV mobile television to the Indian 4G market, where it hopes to establish an LTE ecosystem in what many believed would be a predominantly WiMAX market.
Now Qualcomm is taking its aggressive research and development efforts to a new level with the creation of Qualcomm Services Labs (QSL), an incubator lab unveiled last week that will foster the development of new mobile applications and services to advance the mobile ecosystem – and Qualcomm’s bottom line.
Mobile gaming entrepreneur Issac Babbs is the lab’s general manager, where he oversees all QSL projects, strategy and vision. Wireless Week spoke with Babbs about the lab’s direction, processes and Qualcomm’s strategic thinking behind its launch. Below are edited excerpts from their discussion.
Wireless Week: One thing that struck me as I took note of your announcement was that you’re going direct to consumers with these offerings instead of seeking partnerships with carriers and device manufactures, which to me seems like kind of a more traditional approach for Qualcomm. Why are you deciding to go direct to consumers with some of the services you’re creating in the lab?
Issac Babbs: We’re not necessarily going direct to consumers on everything. What we look at is the best way to take the idea and concept from within Qualcomm to the market. Some are going to be through the traditional channels, which are carriers and OEMs, while others might be through direct to consumer channels. We’re not just waking up and saying everything is going to be through direct to consumer. We’re trying to figure out what’s the best channel to establish this new idea, innovation or product. If it is direct to consumer we’re willing to do that.
WW: Even so, I couldn’t’ help but notice the four services you announced this week were all apps that would be purchased directly by consumers versus something like the Brew operating system which has to get support from both OEMs and carriers before it ever ends up in a consumers hands.
Babbs: It’s actually three of the four that are direct to consumer. Tapioca is a business to business service. I think everybody would agree the world’s changed a bit. The OEMs and carriers are extremely valuable partners and we’re always going to keep working with them.
Sometimes, though, they ask us, “How do we know what works?” We say, “Well, you guys know, don’t you?” And they say, “No, you guys go figure it out.” In some cases we have to go prove that [a solution] works by going direct to consumers, and then we can circle back around with the carriers and the OEMs. The market has changed. Even the carriers and the OEMS don’t know because of what’s moving so fast right now with anything that’s mobile services related. The consumers are really deciding who the winners are and aren’t.
WW: Now Qualcomm does a lot of internal product development. You have your own teams within the company that develop products and services. Why launch a subsidiary company to do that? Is the QSL going to be more nimble because of its smaller scale?
Babbs: I think there are a couple of reasons. One, it is able to function and do things very quickly. The second is all the open platform development, which we’re not getting in the rest of our mainline businesses, and also just culturally the way we can set it up.
It’s not the first time we’ve done this. We have subsidiaries around the world. Flo TV is set up as a subsidiary, it’s direct to consumer. We’ve announced Swagg, it’s a subsidiary that’s direct to consumers through Firethorn holdings. In some ways it might seem like it’s new, but we have a history of kind of doing that.
WW: You mentioned open platform development. I noticed in the announcement the service you support include Android and Apple’s iOS, as well as Qualcomm’s Brew MP. Why support open development instead of focusing on Qualcomm’s proprietary technology?
Babbs: Each of the different projects might have different agendas. Some of them might strategically advantage some of our chip agendas, carrier relationships or network topologies. You’ll find those will be aligned very tightly with Qualcomm. Others, where we think there’s a broader play, will [support other platforms] because we want to capture as many consumers as we can. We look at each of the different products we want to take to the market, whether that’s through partners or direct to consumers, and we figure out which distribution platform might be the best and scale on that.
WW: How does the lab work in practice? Are you treating the projects you come up with like startup companies that need to prove themselves or their own or are they going to be like products within Qualcomm’s broader service portfolio?
Babbs: It takes dedicated teams and a dedicated focus to really start new things. We call them projects but they operate for all practical purposes as startups. They’re focused on creating their service, launching their service, getting traction, getting the scale they need and rolling out the business model they need. They act and function as startups. Once they get traction and we feel that we have scale, then we’ll start looking at them in the longer term as a portfolio product.
WW: You say you’re treating these like startup companies, and startup companies have funding rounds. How do you determine how to invest in these projects?
Babbs: Qualcomm’s been doing this for many years. We have different entrepreneur programs and brainstorming sessions that we tap into. We’ve always got ideas, teams and macro spaces we’ve looked at pretty diligently that we’ve liked. Ideally, all three of those align. Then we have a process inside of Qualcomm Services Labs which is a lot like a venture [capital] process, where we might have concept funding, and then build funding and scale funding. It’s what a lot of venture companies might call Series A and Series B funding. When these are successful they’ll go to an existing business unit, a new business unit, or we might be spun out of the company.
WW: I saw it reported that you had made eight total investments, meaning that you have four other projects waiting in the wings. Can you confirm that?
Babbs: We’ve got seven projects going internally and one externally. We’ll probably be saying some things about a couple of them in the next two to three months. There’s a partnership we’ll also be saying some things about in the next two to three months that we’re pretty excited about.
WW: Can you give me a ballpark figure on how much Qualcomm has invested in the QSL so far?
Babbs: As a company, we spend about $2 billion a year in research and development, so it’s a big part of our overall culture. We do treat [the QSL projects] as startups, but we don’t break out any numbers on what we put into specific projects.
WW: How long have you been working on the development of the lab?
Babbs: We really got started towards the end of last year, specifically November 2009. Our teams really started building in February and March of this year. They’re moving really fast and we’re really happy with the speed of deployment.
WW: What’s the most thrilling part of this whole venture for you?
Babbs: What excites me the most is being able to tap into all of our intellect from around the company: being able to take those ideas, concepts, products, and quickly commercialize some of them to see if they’re winners in the marketplace. That’s what really gets me going.
Filed Under: Infrastructure