By buying Atheros for $3.1 billion, Qualcomm is in a certain sense getting out of the cell phone business ... and getting into the mobile "communiputing" business.
It's way more than Wi-Fi, way more than cellular, or even the two together.
Qualcomm's historic focus has been in mobile phone radios, for handsets and base stations, notably for CDMA cellular networks. Atheros' original goal was to create Wi-Fi chipsets, for PCs and access points. (In June 2010, it unveiled a 450Mbps Wi-Fi chipset.)
Both companies have changed their focus dramatically over the last five years, mainly through sustained acquisitions. Bringing the two companies together does far more than simply add Wi-Fi to Qualcomm's existing line of radio and application processor silicon. (Watch the tech M&As from 2010.)
It's not even Qualcomm's first Wi-Fi acquisition: In late 2006, it bought Airgo Networks, a pioneer in the technologies underlying the 802.11n Wi-Fi standard, integrating the technology into its cellular products. Executives said this week there are no plans to replace the Airgo-based portfolio.
Instead, Qualcomm is looking beyond the phone, to the development of a highly connected world that will require a wide range of communications silicon. This strategy has been unfolding since current CEO Paul Jacobs in 2005 took over the top post from his father, and Qualcomm founder, Irwin Jacobs. [See from February 2007: Qualcomm races to retool the mobile phone.]
Qualcomm sees the traditional mobile phone, which handled only voice calls, evolving into a device that blends both communications and computing: call it communiputing. And consumers and business users increasingly expect that communiputing will be available anywhere, anytime, and that means wireless connectivity.
"The growth in smartphones and mobile OSs is creating a broad change in the way computing happens in various adjacent markets," says Steve Mollenkopf, Qualcomm executive vice president, speaking at a conference call with analysts about the deal. "We look at [this trend] more as cellular [technology] expanding into these other markets."
The success of the iPad tablet, now spawning a riot of rival products, is a case in point, Mollenkopf says. "Tablets historically were drawing platform technology from the PC world," he says. "Now, they're pulling it from the phone world."
The company's well-regarded Snapdragon applications processor, for example, was picked as a key element in the common hardware spec for Microsoft's Windows Phone 7 handsets; and it accounts for the slew of favorable product reviews that noted the smooth, fast, slick user experience of the new phones. Snapdragon is powerful enough to handle sophisticated games, along with a wealth of rich media content downloaded and uploaded to the Internet.
This convergence of wireless communications and computing goes way beyond individual users equipped with a single personal device. Users have a growing number of such, and increasingly live and work with a growing array of consumer electronics and other gear that are wirelessly networked, communicating and computing. "There will be more technology [needed] to connect with more things that you do [today] with the phone," Mollenkopf says.
"We have shared vision of expanding into new technologies and [market] segments, such as consumer electronics and the connected home," says Atheros CEO Craig Barratt. He'll be president of Atheros renamed as Qualcomm Networking & Connectivity, reporting to Mollenkopf. "This is more than Wi-Fi. We'll be driving a broad set of [integrated] technologies into new markets."
Wi-Fi is a term that applies to an ever-growing range of product types, each with distinctive and specific requirements, Barratt says. As part of Qualcomm, Atheros will continue introducing an array of advanced Wi-Fi features, many of them optional parts of the IEEE 802.11n standard, that together will make wireless connections much more reliable, with even higher throughput. [See "Major Wi-Fi changes ahead."]
Somewhat surprisingly, Barratt predicts a much greater complementary relationship between LTE and advanced Wi-Fi. "We think a significant part of the business model for carriers will involve local area offload [i.e., shifting traffic from a cellular to Wi-Fi connection]," he says. "The next generation networks will need this and being able to deliver that capability will be important."
John Cox covers wireless networking and mobile computing for Network World.
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