Group Selected Case Analysis

By Edna Taylor,2014-05-17 07:10
11 views 0
B. The SWOT analysis reveals the following: 1. QUALCOMM's Strengths: a. CDMA technology has a high adoption rate in the North American market.

Group Selected Case Analysis



    Electronic Commerce

    Management 671

    Radford University

    Spring 2001

    Elizabeth Curl

    Karl Zartarian

    Mike Biscotte

Group Selected Case Analysis


Contents Page

I. Introduction

II. Description of the Company

III. Description of the Industry

    IV. Description of Third Generation Wireless

V. Analysis of Porter‟s Five Forces

VI. STEEP and SWOT Analysis

VII. Business Model

VIII. Target Markets

IX. Company Core Competencies

    X. Company and Industry Financial Information

XI. Key Company Challenges

XII. Problem Statement

XIII. Strategies and Recommended Actions

XIV. Summary

XV. References


    There is a revolution in the world of communications and information transfer today, and this revolution is wireless.

    The Internet has affected the way people work, play, and communicate. Shopping, research, and messaging are all popular uses of PC-based internet applications. The internet has streamlined business, personal, and financial transactions, and provides a cost-effective method of communications.

    Cellular phones have also affected the way people communicate. Cellular usage has exploded as society has embraced the ability to talk with each other any time in any place. Safety and convenience issues have become significant drivers in its rise in popularity.

    The next generation of wireless devices, however, will merge these two functionalities. Consumers desire access to internet-based activities from their wireless handsets. Businesses want to perform all manner of transactions in a mobile manner. Consequently, the companies that can support and standardize the required wireless equipment and technology will prosper.

QUALCOMM is such a company. QUALCOMM‟s patented technologies form the

    basis for the global wireless platforms. Their significant research and development activities have allowed them to stay at the forefront of wireless technology, and their broad patent base provides a significant revenue stream.

    QUALCOMM, however, faces challenges from several fronts if they are to retain their industry leadership position. These challenges come from other chip manufacturers, alternate wireless standards, and government-sponsored communications systems.

    This case analysis will document QUALCOMM‟s present situation, investigate the overall industry, discuss the challenges QUALCOMM faces, and provide recommended actions for the future.



    QUALCOMM, Inc. is engaged in developing and delivering digital wireless communications products and services based on a digital technology called Code Division Multiple Access (CDMA). CDMA is a method of transmitting information securely over radio frequencies. QUALCOMM owns several patents, which are essential to the core of their business worldwide, supporting various aspects of CDMA technology.

    QUALCOMM was founded by Professor Irwin Jacobs and Professor Andrew Viterbi in 1985. Their vision was to create a company focused on „Quality Communication‟ for the public sector, hence the name „QUALCOMM‟.

    QUALCOMM‟s first headquarters was in an office located above a pizza parlor in San Diego, California. Professors Jacobs and Viterbi began research and development on adapting CDMA, a secure wireless transmission technology that was developed for the military during World War II, for commercial use.

    QUALCOMM was incorporated in 1985 and by 1989 they had proposed CDMA technology to the wireless industry. QUALCOMM currently has over 400 U.S. patents and over 900 U.S. patents pending related to CDMA technology. Approximately 12 percent of the 550 million consumers who utilize first and second generation wireless technology employ networks that are based on QUALCOMM‟s CDMA technology. QUALCOMM‟s major emphasis is the global

    implementation of their standard, cdma2000, for third generation wireless.

    QUALCOMM, Inc. is divided into several business units, including QUALCOMM Technology License (QTL), QUALCOMM CDMA Technologies (QCT), and QUALCOMM Wireless Systems (QWS).

    QUALCOMM Technology Licenses (QTL) generates fees and royalties from manufacturers‟ use of CDMA technologies. The company has licensed its CDMA patent portfolios to more than 90 telecommunications equipment manufacturers.

QUALCOMM CDMA Technologies (QCT) is the world‟s leading developer of

    CDMA integrated circuits, system software, and tools for wireless device and network infrastructure equipment manufacturers. QCT has shipped more than 350 million CDMA integrated circuits worldwide. QCT now manufactures circuits featuring wireless position location technology through its subsidiary, SnapTrack. QCT generates revenue from the sale of CDMA-based products.

    QUALCOMM Wireless Systems (QWS) provides mobile communications and logistics management systems and services to the transportation industry through its OmniTRACS systems. QWS also develops and manufactures gateways and devices for the Globalstar system, an advanced satellite network offering continuous mobile voice and data services.


    ? QUALCOMM has several other ventures, including a project with Technicolor

    Inc. to develop a digital delivery system for the distribution of movies, and the

    Eudora email program which they have developed and marketed.

QUALCOMM employs over 6,000 people worldwide, with headquarters in San

    Diego. Their stock is traded on the NASDAQ under the symbol QCOM and their

    website can be viewed at A list of their executive officers is shown in Figure 1.


    Name Executive Office Irwin Jacobs Chairman of the Board and Co-Founder Richard Sulpizio President

    Anthony S. Thornley EVP and Chief Financial Officer Steven R. Altman EVP

    Franklin P. Antonio EVP and Co-Founder Paul E. Jacobs EVP



    The wireless telecommunications industry is poised for intensive growth over the next few years. The International Data Corporation (IDC) estimates that from 1998 to 2000 wireless users worldwide increased from 303.5 million to 550 million. The IDC also estimates that the number of wireless customers will increase to over 1.1 billion users by the year 2003. The wireless telecommunications industry is a dynamic system that involves the complex interaction of a large number of groups including international and national standard-making bodies, national governments, wireless network providers, and hardware manufacturers. The wireless telecommunications industry consists of multiple mobile networks including the Internet, GSM-MAP, and ANSI-41. All of these networks operate within different radio frequency bands with different access modes such as CDMA, GSM, PDC, and TDMA.

    Key measures of wireless technology are peak data rate, voice quality and spectral efficiency/capacity, roaming, and mobility. Spectral efficiency/capacity is

    a measure of how efficient a particular technology (for example, GSM, CDMA, or TDMA) utilizes government authorized radio spectrum for public communication. Currently, there are three generations of wireless technology, referred to as first or 1G, second or 2G, and third or 3G. The key measures steadily improve with each successive generation.

    Each of the national governments, network providers, and hardware manufacturers champion their own standard and access mode. This favoritism has resulted in a host of regional networks that are generally found within national borders. While the average wireless user can roam anywhere that a GSM network (the predominant network in Europe and Japan) is in place, the technology is limited in quality, peak data rate, and spectrum efficiency. The wide variety of networks, standards and access modes located regionally prohibits the average consumer from using their personal wireless system globally.

    Currently, first and second generation wireless technologies are the predominant technologies worldwide. However, with the increasing reliance of consumers and businesses on the Internet, e-commerce transactions, streaming media, and video conferencing (applications that require high data rates, improved quality, and excellent spectrum efficiency) these first and second generation technologies are rapidly becoming inadequate. The industry, and QUALCOMM in particular, is making a concerted effort to develop multi-mode, multi-band and multi-network devices that will allow seamless worldwide roaming.



    The International Telecommunications Union (ITU) has adopted one global standard based on CDMA technology. That standard, however, emphasizes two major options for the third generation wireless service. Those options are WCDMA and cdma2000. While WCDMA (“wideband” CDMA) is based on CDMA technology, it is a generic standard that was produced by a variety of standard-making bodies and several companies. However, cdma2000 is exclusive to QUALCOMM and is patented by them in every respect.

    The battle between WCDMA and cdma2000 is an instance where QUALCOMM‟s customers are also their competitors. Wireless operators that implement the WCDMA standard do not pay royalties or licensing fees to any company since the standard is generic. However, the manufacturers of the chips used in the WCDMA equipment are required to pay licensing fees and royalties for those aspects of CDMA technology that are used that QUALCOMM has patent rights to. Separately, wireless operators that implement the cdma2000 are required to pay fees and royalties to QUALCOMM for using their standard. QUALCOMM earns revenue from the cdma2000 chip manufacturers as well. Therefore, although QUALCOMM‟s strategy is to implement cdma2000 technology worldwide and they are competing head-to-head with WCDMA, they continue to generate revenue from WCDMA users.



    Porter‟s five forces are used to analyze QUALCOMM relative to its industry. This

    analysis includes QUALCOMM‟s suppliers, buyers, and rivals, and any new

    market entrants and substitutes.

    A. Suppliers

QUALCOMM depends on third parties for manufacturing, assembling and

    testing of their integrated circuits. Most of these suppliers are sole source

    vendors and they are used in the start-up phase of a product life cycle.

    This is risky for QUALCOMM, because should any of these suppliers ally

    themselves with QUALCOMM‟s industry rivals, it could delay product

    development and hinder sales revenue. In addition, should any of these

    suppliers allocate capacity to other products, it could hinder

    QUALCOMM‟s product development.

Much of QUALCOMM‟s intellectual capital is developed by their own

    technical personnel. Should they lose any of these qualified personnel to

    industry rivals, it could cause them to lose their intellectual property.

Designers of CDMA integrated circuits, as well as companies that promote

    non-CDMA technologies, include Ericsson, Intel, LSI Logic, Lucent,

    Motorola, Nokia, Nortel, Philips, Samsung and Siemens. All of these

    competitors are also licensees of QUALCOMM. These suppliers are also

    buyers, but could harm QUALCOMM‟s product development if they were

    to align themselves with other network providers. These suppliers can

    also obtain licenses from QUALCOMM to manufacture CDMA integrated

    circuits that compete directly with QUALCOMM products.

Satellite systems providers are necessary for QUALCOMM‟s success with

    OmniTRACS, Truckmail, and Omniexpress. Transponder capacity is

    critical for these systems to be successful. If the capacity were not

    adequate, it would harm their business and operations of these systems.

    Satellite systems could also affect the Globalstar product. Globalstar is a

    satellite based wireless telephone. If the satellite network should lose

    capacity or change, it would have adverse affects to their revenues.

     B. Buyers

QUALCOMM has buyers in the transportation, entertainment, and

    communication industries. Some of QUALCOMM‟s buyers in the

    communication industry could pose competitive problems. A high

    percentage of QCT‟s revenue, 39%, is generated from agreements with

    Samsung Electronics, LG Information, and Hyundai Electronics of Korea.

    QUALCOMM needs to expand their customer base since the loss of one

    or more of these customers would pose a significant loss of revenues and

    could affect QUALCOMM‟s profitability.


     C. Industry Rivals

QUALCOMM may be threatened by existing rivals who have more

    established relationships and distribution channels. These rivals could also form alliances among themselves or existing customers, which could affect buyers‟ decisions to purchase products or license technology from

    QUALCOMM. This could also cause new competitors or alliances among competitors to emerge, causing QUALCOMM to lose market share.

    D. New Entrants

    New entrants might consist of competitors offering low cost terrestrial-based products, in addition to future satellite-based systems, may intensify competition in new markets and impact margins. Telephone companies can pose threats as new entrants into the market. If they enter with newer technology for 3G networks, this could impact QUALCOMM growth. An independent military contractor could emerge as a new entrant into the market with a radically different technology.

    E. Substitutes

    New satellite systems could be a substitute for CDMA. Also, new GSM technology for 3G networks could replace CDMA altogether. Another substitute threat is WCDMA for the European network system. Lastly, new land-based technology as substitute for CDMA or a different form of wireless could pose a substitute threat to QUALCOMM‟s technologies.



A situational, technological, environmental, economic, and political (STEEP)

    analysis and a strengths, weaknesses, opportunities, and threats (SWOT)

    analysis were performed in order to to better understand QUALCOMM‟s potential

    for future success.

A. The STEEP analysis reveals the following:

    1. Situation Wireless communication and technology is in its early

    product life cycle stage. Many new forms of technology could form

    over the next decade and new companies and alliances may form

    as the industry matures. Satellite communication is evolving and

    may prove to be a viable alternative to land-based wireless


    2. Technology In the early stages. New technology is rapidly

    emerging and QUALCOMM needs to maintain an intellectual

    advantage in order to meet their financial goals.

    3. Economic The current economic situation is uncertain. In fiscal

    year 2000, QUALCOMM depended on 47% of its revenue from

    international customers. A faltering overseas economy will

    adversely affect their revenue and profits. Additionally their

    revenue will be adversely affected if consumer spending in the

    United States continues to stagnate.

    4. Political As noted above, with 47% of revenue dependent on

    international customers, should the political environment change in

    Korea or China, QUALCOMM will also be directly affected. Also,

    political situations in Europe may play a part in QUALCOMM‟s

    success of entering the European market.

B. The SWOT analysis reveals the following:

    1. QUALCOMM‟s Strengths:

    a. CDMA technology has a high adoption rate in the North

    American market.

    b. Their patent protection ability is a key competence as they

    aggressively protect their intellectual property.

    c. QUALCOMM is financially sound with stable earnings,

    profitability, and growth providing them with necessary

    resources for continued expansion in research and



Report this document

For any questions or suggestions please email