In early 2014, Qualcomm (NASDAQ:QCOM) announced its then next-generation high-end mobile system-on-chip known as the Snapdragon 810. This was the successor to the hugely popular Snapdragon 800/801 processors found in just about every worthwhile high-end Android smartphone.
At first glance, the 810 looked like a very strong successor to the 801. It would see a dramatic increase in CPU and graphics performance, integrate an even better cellular modem than what its previous flagship chip had, and looked better in every way. Unfortunately, while the 810 was "better" than the 801 in an absolute sense, it had some pretty serious issues that ultimately led to the loss of a substantial design win, as well as a general "souring" of Qualcomm in the eyes of consumers.
What was wrong with the chip, exactly?
Before the Snapdragon 810 made it into commercially available devices, there were several reports that the chip was facing problems with overheating. Indeed, ahead of the Samsung (NASDAQOTH:SSNLF) Galaxy S6 launch, and before Qualcomm disclosed to investors that it had lost both the S6 and the Note 5, the rumor mill claimed that Qualcomm had lost the Galaxy S6 design precisely due to the Snapdragon 810 overheating.
Qualcomm, of course, refuted these claims with statements such as, "the device is working the way that we expected it to work." When devices using the chip made it to market, however, there were numerous reports of devices overheating. Not cool, Qualcomm (bad pun completely intended).
To be perfectly fair, because Qualcomm was essentially the only game in town for very high-end mobile system-on-chip products, it was able to win essentially all of the non-iPhone/non-Samsung flagships. Samsung's flagships are quite high volume relative to the rest, which led to a material negative impact to Qualcomm's revenues.
Things are looking up for the Snapdragon 820, though
Although the 810 is, without a doubt, Qualcomm's most disappointing product in 2015, I'm hopeful that the Snapdragon 820 won't be the company's most disappointing product of 2016. Initial performance previews of the device show it to offer good performance in CPU tasks -- although it posts a disappointing showing in the SPECint2000 CPU benchmark performed by AnandTech -- and excellent performance in graphics tests.
The chip also integrates a leading-edge LTE modem. Plus, the rest of the intellectual properties on-board -- image signal processor, video encoder/decoder, etc. -- look solid.
Perhaps most importantly, the consensus among reviewers who were able to test Qualcomm's Snapdragon 820 reference phone -- admittedly a very large 6.2-inch device -- say that it didn't exhibit any signs of "overheating." Of course, we'll have to see how it performs in real-world shipping devices that may not have the ability to handle the heat output of the 820, as well as Qualcomm's gargantuan reference phone design can.
Perhaps the most exciting part of the Snapdragon 820 is that the rumor mill seems to be quite abuzz with chatter that the Snapdragon 820 will find its way into Samsung's upcoming Galaxy S7 flagship. If this is the case, Qualcomm should enjoy a fairly nice incremental revenue contribution starting in the current fiscal year, particularly as an S7 win would very strongly imply a Note 6 win, as well.
Ashraf Eassa owns shares of Qualcomm. The Motley Fool owns shares of and recommends Qualcomm. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.