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QUALCOMM, Inc.
Revisiting Wireless Data

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By BRational
April 20, 2004

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We have not talked about BREW for some time. For several years, we had to hear Dr. J and especially son Paul put in that extra plug for BREW every chance they got. In a world that seemed dominated by Symbian and Java, with mighty Softie pushing their Smartphone to grab a piece of the wireless data OS pie, there goes Qualcomm pushing BREW. That same greedy Qualcomm, in a shameless attempt to get a recurring royalty on the use of the handset, a handset on which they have already collected a royalty, and for which they have made the chipset... Who needs BREW? Yawn... right? Wrong! Try again!

Like most everything Qualcomm does, tenacity is paying off. We can rattle off the latest statistics: 88M+ Worldwide BREW application downloads, 21M+ BREW-enabled devices in the market, 120+ Commercial BREW device models, 24 BREW device manufacturers, 23 Commercial BREW operators, 17 Countries with BREW services...One should qualify these numbers by 88M+ downloads, one download at a time, one operator at a time, one country at a time... But at the end of the day, this seems like a thriving, successful and finally moneymaking enterprise. We'll get more information in the coming earnings release on the relative role that BREW has been playing for the bottom line, but so far the direct impact in that regard is still minuscule compared to the chipset sales volumes or CDMA royalty stream. But the growth has been there, and has gone beyond the gathering of "critical mass" stage to become an established enterprise, with a legion of developers, and most important users. The fact that BREW delivers most of the "cool" in the CDMA 1X world is perhaps the main accomplishment. The fact that most of the large CDMA carriers have joined the BREW pub means that China (Unicom), Japan (KDDI) and the US (Verizon), not to forget are all fueling the development and growth in BREW-land. And now India is hopping on board, giving plenty of fun work to do to its legion of legendary software wizards.

I was never much of a fan of BREW. After the initial curiosity, I yawned every time the Jacobs father and sons sang its praises. And I kept waiting for the next big thing, the killer app that will set 3G on fire. Instead, like everything in the wireless world, especially the wireless data world, the evolution came in small increments. It's still coming, of course, slowly, perhaps at a glacial pace for some of us. Evolution, not revolution, is the way, they said. Revolutionary capabilities, but only evolutionary uses. Technology experiences revolutions, but humans only evolve. But something apparently kept brewing, and now a dizzying array of capabilities appear to be delivering value from full-featured handsets, and increasing ARPU in the process for thos3e who signed on, and had faith.

What is different? Nothing in a discrete-event sense; just as we look at where we are now, compared to just one, two or three years ago, we see that we've come a long, long way with handset-based data uses. The realization came as I stumbled on the Spring 04 issue of Brew Connection, a magazine devoted to the BREW community; the Spring 04 issue is dated April 16, so it is still fresh off the press, and is available here.

It is 52 pages of cool pictures, of the kind we used to once associate with Nokia (when faceplates wuz hot...), but mixed in with the kind of substance befitting once-staid Qualcomm. It is a fitting tribute of sorts to the state of play in BREW, and wireless multimedia services. It also contains feature ads from some of the BREWmeisters like LG and Samsung, and Verizon's Get It Now. But what really brought home how far this enterprise has come is the presence of marquee names like Sony Music box (for music and video downloads), and Disney. This is no longer the little nerdy geek's low-rez boring pac-man game, this is major media biz.

In the midst of the glam look and feel are serious articles, or at least articles that address serious topics, about the wireless data market (bottom line: yes...), trends and what's next, how to price data, and several other pieces of interesting reading for those following the wireless data business. In fact, as investors in wireless communication companies, we can no longer afford not to follow the wireless data market. That is now driving the handset replacement cycle, especially where CDMA 1X EV-DO is being deployed, and to a lesser extent WCDMA, though the pace is beginning to pick up in Japan. It is also driving the carrier's growth, or is widely believed to have the potential to do so. Certainly the Korean operators have benefited handsomely from the data movement, and BREW has helped make this possible. Page 32 has some interesting metrics about socio-demographic patterns in use of messaging and data�for those who are sociologically inclined.

So Nokia missed the boat on flip phones, went for the low end of the soap bar models, delayed 3G to further milk and prolong its product cycle. But the world lived on, and 3G came anyway, in Qualcomm's preferred flavor. And as it bragged about making its own 1X chipsets, BREW-enabled no less, EV-DO is here, and with it expanded BREW-based capabilities. It's not so much the two points of global market share that have shocked Nokia investors, as it is the beginning of the end of the supreme reign of Nokia in the domain of handset cool. Cool is no longer just how it looks, but also what it does, and how it does it. That's where BREW factors into the cool equation.

And we've barely seen Qchat in any significant way, not to mention the ever-promised location based services.. we shall continue to evolve. In the meantime, check out the BREW Connection magazine, and say wow! This is finally happening, in my lifetime...

As always, thoughts and comments are welcome, and appreciated.

BR


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