On this special episode of The Six Five – Insiders Edition, hosts Patrick Moorhead and Daniel Newman are joined by Qualcomm EVP and QTL President Alex Rogers to discuss Qualcomm’s recent win in the Court of Appeals, its licensing business, 5G intellectual property, and how Qualcomm helping spread the technology around the world.
In our conversation, Alex, Patrick and I explored Qualcomm’s recent victory in the Ninth Circuit Court of Appeals which overturned a 2019 ruling that Qualcomm had violated antitrust law. Alex explained that Qualcomm has a unique business model with technology development on one side and licensing and patents on the other side. The court ruled that Qualcomm is allowed to license patents separately from chip sales without violating laws. This is a huge win for business model innovation.
Qualcomm’s two sides of business. Alex shared more about the different sides of Qualcomm’s business model. First, the Qualcomm Technology Licensing (QTL) business takes the intellectual property that Qualcomm develops and seeks to get a fair return by way of royalty payments. Essentially, QTL is licensing other companies to use its technology. The royalty payments in turn, continue to drive and fund the innovation that is happening in Qualcomm’s semiconductor business. The semiconductor business makes the chipsets that drive the implementation of the technology.
Qualcomm’s role in 5G technology. Alex explored all the vital roles that Qualcomm fills in the development and production of 5G technology including research, standards, and implementation. They are a leader in all aspects of 5G, but most importantly, Qualcomm helps OEMs all over the world bring the technology to market. Essentially, Qualcomm is enabling cellular and the mobile industry to move forward.
Getting the technology to succeed. We also discussed how QTL utilizes engineers to offer services to licensees to ensure the technology is implemented successfully. The company offers training modules, consultations, and testing. They even built labs around the world so licensees can test implementations before releasing to the public. Qualcomm’s interest isn’t for self-gain, but to spread 5G technology around the world.
5G will be a gamechanger. Finally, we explored what the future holds for 5G and how our lives will forever be altered by widespread adoption. In the past, technologies like GPS have altered the way we live, work, and connect. 5G will be no different. Alex believes — as do we — that we are on the cusp of something revolutionary and it’s only a matter of time before we will start to see the impact on the implementations.
If you’d like to read more about Qualcomm, QTL, and the advancements in 5G, be sure to check out their website or listen to the full episode below. While you’re at it, be sure to subscribe so you never miss an episode of The Six Five Podcast.
You can watch or listen to the video recording here:
Patrick Moorhead: Welcome to the Six Five Insider Edition. I am Patrick Moorhead, with Moor Insights & Strategy, and I’m joined by my awesome co-host, Daniel Newman, with Futurum Research. On the Six Five Insider Edition, we talk with the most influential senior executives in the technology industry. But before I introduce today’s guest, which I’m really excited to do, I wanted to say hello to my partner in crime, Daniel. How are you doing, buddy?
Daniel Newman: Patrick, it’s great to be here. And anyone that’s watching the video might know who the partner in crime is right now and who our guest is right now. But for those of you listening on the podcast, and we know there’s a lot of you out there, the suspense is going to last just a second or two longer, pat. But I’m doing great. I’m really excited about this show.
Patrick Moorhead: Excellent. So what I’d like to do is introduce Alex Rogers, Qualcomm’s EVP and President of its licensing business, which we all refer to as QTL, because it’s easier to talk about, that which stands for Qualcomm Technology Licensing. So Alex has a tremendous amount of legal and business experience, which he uses today to manage IP, regulatory, commercial matters for QTL, and ensures continued growth and monetization, as in the business of QTL’s existing and future licensing programs through negotiating licensing agreements. Alex has led QTL since 2016, has signed multi-year license agreements with every major handset OEM you’d be familiar with, like Apple, Samsung, Huawei, Xiaomi, Vivo, LG, and even more.
A fun anecdote I wanted to share first, before I give the floor to Alex, is what Qualcomm’s CEO, Steve Mollenkopf says. Steve says, Alex is the one English major in a company of 20,000 engineers that help ensure our technologies deliver the biggest impact for the world. And gosh, that’s a big intro. Alex, welcome to the show.
Alex Rogers: Hey, thanks Patrick. It’s great to see you. Daniel, great to see you. Thanks for having me on Six Five. This is great. Good day today, by the way, really good day.
Patrick Moorhead: I know, I know. A wonderful day. I think a lot of people at a Qualcomm are smiling, which we’re going to get into a little bit later. Let’s talk first, maybe, a little bit about your background and how did an English major come into a world of 20,000 engineers?
Alex Rogers: Yeah, so everything in my background happened by accident. You know, I actually didn’t even want to be an English major. I wanted to be a theology major. But at Georgetown I wanted to go abroad. Believe it or not, I wanted to go to Israel for a year. You couldn’t be a theology major at Georgetown and go to Israel for a year. So, I just picked a major that allowed me to go. They have a great English department, the Hebrew University in Jerusalem, because they have all these Brits over there. So, I was an English major by default because I cared more about traveling than my major, actually.
And then I actually took the road less traveled. And you know, sometimes you hear about folks who said they always wanted to be a lawyer. We,, I actually never wanted to be a lawyer. I actually only became a lawyer because I basically had no options. My first job out of Georgetown, by choice, by the way, was working construction. I want to do something different than reading and writing. And working construction, I can tell you, it was really different. But I wasn’t actually built for it, and so out of survival, I wound up becoming a teacher, a high school teacher. And then the reason why I went to law school, much to the dismay of my English professors, by the way, one of whom criticized me as basically opting for something that was completely not creative, was because I was in between insurance policies.
When I had stopped teaching high school, my insurance ran out and I had a job as a gopher in a law firm, basically pushing a mail cart and running errands and the insurance hadn’t kicked in yet. And I blew out my knee. So I asked Mazy, who’s now my wife, “Hey, look, I’ve got a minimum wage job that I can’t even do. I can’t push a mail cart because I can’t walk. I need surgery. I don’t have money for surgery.” I didn’t have insurance. I was basically bottom of the barrel. So what do you do when you’re at the bottom of the barrel? Go to law school. So I went back to Georgetown and got a law degree. And it was purely mercenary. I just needed to make money.
And it was interesting, actually applying to law firms, I had a litmus test. When people asked me if I always wanted to be a lawyer, I would tell them, “Absolutely not. I just went to law school because I needed money. I had no money.” And if they wanted to hire me, I figured they were human. If they didn’t want to hire me, I figured, “Eh, I probably don’t want to work with you anyway.”
Daniel Newman: That’s funny though. I mean, it is a profession where the people that tend to be monetarily driven tend to do very well. So I think you probably captured the attention of someone. And you had a very successful career in a law firm before you ended up at Qualcomm.
Alex Rogers: Again, purely by accident. You know, I wanted to be a transactional lawyer. When I came to the law firm. They said, “Well, we’re not going to put you in the transactional department. We’re going to make you a litigator.” And I said, “Well, wait a minute. That’s not what I signed up for.” And they said, “Well, that’s what we got. If you don’t want the job, that’s fine. Don’t take it.” And of course, having had no money, and now having had loans, I took the job. And it turned out being a litigator was not that much different than being a teacher, actually. So I wound up being a litigator. I had a skill set that had been honed across four years of high school teaching that served me very well as a litigator.
Daniel Newman: Congrats on your success. And speaking of congrats on your success, we’ve got a lot of questions we want to ask you. It’s been great to hear a little bit about your background. Very interesting. It’s always fun to learn more. I would never have assumed that was your path or trajectory, but at the same time, with the career you had, there’s always those interesting turns. But there was some really big news yesterday. So we had this podcast scheduled anyway, but just this past day, and it might be a few days by the time the listeners hear this, you guys had some really big news.
And congratulations is in order, Alex. You guys at Qualcomm had a big win in the Ninth Circuit Court of Appeals. This is a really big deal. And from a background standpoint this was the FTC’s case that in 2019, Judge Lucy Koh ruled in favor of the FTC. That meant there was going to be a whole bunch of work for you and your team and Qualcomm’s licensing business to renegotiate. And yesterday this was overturned. You must be feeling very good today. Talk a little bit about what happened, how you’re feeling. Give a little background for everybody out there that wasn’t following the case as close as Patrick and I were.
Alex Rogers: We went through a period of regulatory review of our licensing business. And the FTC jumped in, along with China, Korea, Taiwan. And that started quite a while ago, but they filed the litigation in Northern California in January of 2017. And they had a number of theories that they advanced, and the district court judge agreed. She issued a 230, 220-odd page opinion agreeing. We went up to the ninth circuit, and you could infer from the oral argument that the ninth circuit panel really had a lot of skepticism about the FTC’s case. The decision that came out yesterday, it can only be characterized as a complete win on every single issue. It really is an important decision. I think it’s an important decision not just for Qualcomm, not just for QTL, but I actually think it’s an important decision for innovation and important decision for our industry. There’s a lot about this decision that’s is just really good. But for our business and for our business model, it is a complete win, an unmitigated win. And so it’s really terrific.
And I could probably walk you through, I think, what are just kind of maybe some of the key points are the decision, and then be happy to kind of get into a discussion on some of the other points. But I think the first thing is, look, one of the things the ninth circuit court said is, when you apply competition law to innovation, you have to do it with great care. And I think that’s really important. And that to me is kind of a macro tone or a macro statement of this decision. The second thing that this decision does, which I think is very important, is actually recognizes that business model innovation, not just technology innovation, but business model innovation is really important. And one of the things that frustrated me for years is I would hear people criticize Qualcomm as having a quote-unquote unique business model. Yeah. We have a unique business model. It’s an innovative business model that, by the way, is extraordinarily good for the mobile industry. It’s extraordinarily good for 5G and for consumers. It’s extraordinarily good for essentially enabling more technology innovation and more competition.
And so the ninth circuit got it. The ninth circuit said, “Business model innovation matters and unique is not bad. Unique can be good. And you have to protect that.” And more specific to Qualcomm and to our particular business model, they said, “Hey, look, we understand that you have two businesses and the technology development business, developing essential researching and developing essential technology, you can license your patents, your standard central patents separately from your chip sales. There is nothing in antitrust law or any law,” they say, that prohibits that. And that’s a really good statement. And then they also corrected record in terms of how to look at royalties, and what was wrongly done in the district court decision in terms of how to evaluate royalties and also other issues that I think were really important. I could keep going, but I probably should let you guys jump in and talk a little bit.
Patrick Moorhead: I’ll tell you, we could make an entire show of this. I know Daniel and I researched and wrote a lot about it, because quite frankly, what I see is large technology companies, worth trillions of dollars, leveraging a lot of these core competencies and intellectual property that Qualcomm has fundamentally created and Qualcomm made a bet on 10 years before their products came out, at very high risk and expense to the company. But let’s shift, if we can, the conversation. For those who might not be as close to this, maybe talk about characterizing Qualcomm and what the current focus is, because there’s really two sides of the Qualcomm business.
Alex Rogers: Yeah. So the current focus of Qualcomm is 5G. But let me back up and talk about these two sides. So one side is what I consider to be deep scientific research and how to maximize the use of some of a physical thing that exists, and that is radio spectrum. And we are extremely good at that. We’ve always been good at that. That is actually the heart of the company. It is essentially the capability on which the company was founded. Information theorists like Turbie and Jacobs, Gillhausen and others, really good at that. Those people, who develop cellular systems because they really understand information theory for digital communications in wireless environment, actually had to go out and hire people to create the other part of the company, which is folks that knew how to build semiconductors, folks that knew how to build products and essentially implement the cellular systems that they were creating.
So there are two sides to the company. What the licensing business does is it takes this work that we do to create essential technology, which essentially is the foundation of the mobile world. And we go out and we seek to get a fair return through our intellectual property in the way of royalties. And we continue to drive and fund that innovation, that fundamental research that drives the mobile industry, and now is, with 5G, going to drive mobile cellular into basically every industry. The semiconductor business is a business that, as is obvious, basically makes the components and drives the implementation of technology at the chip set level. And so these two businesses are separate. And as the ninth circuit recognizes, that’s okay, actually. You can have these two businesses operate separable.
Patrick Moorhead: Yeah. It’s incredible when I look at the amount that you’ve done and your current focus on 5G. And what I always love to say, Alex, is don’t confuse R and D. They’re different. There’s a lot of companies that do R and D. There’s a lot of companies that actually do more D as part of that R and D. There’s very few companies that do classic R.
Alex Rogers: Yeah. So when you go back to … one of the challenges that we faced a little while back when Broadcom wanted to buy us, the CTO of Broadcom basically said, “Look, we have a semiconductor business and I’m going to do R and D that only has line of sight to putting a product in the market. And so whatever that line of sight is, whether it’s 18 months or two years, I am not going to go back 10 years and do research that is going to form essentially the bedrock of the mobile industry or any other industry.”
Well, that’s what Qualcomm does. We’re 10 years ahead of the industry. We’re doing research, not product development, but research in how to essentially utilize that spectrum and create cellular communication systems that are more and more efficient and effective in utilizing that spectrum. It’s an ongoing process. We’ve never stopped doing it. And it’s unique. We’re really only the company left and in the United States that still wants to do this. And it is the bedrock foundation of mobile. And as mobile through 5G now expands out into other industries, it’s the bedrock foundation of 5G and mobile as it will translate into implementation and other industries. It’s critically important.
Daniel Newman: It’s a very interesting dichotomy. And if you look at that moment in time, when that acquisition could have happened, and you look at where we would be now had it happened, all I can say is you went back and read my research, and Pat, yours as well. And actually we even co-wrote a few pieces on Forbes that we could not have been more prudent in our opinion, Alex, that that would have been a terrible thing for the innovation ecosystem here in America, especially as 5G was coming around the corner. So at least my analyst opinion is that I’m very glad that Qualcomm was allowed to continue in its current form to help lead and drive the innovation that it is driving. And speaking of that, in our notes, we commonly refer to Qualcomm as an orchestrator in 5G. And when Pat asked you about what does Qualcomm do, your initial answer was, “Well, you know, our current focus of course is 5G.” This is that moment where … Tell everybody, explain to everybody, what is Qualcomm’s role in 5G?
Alex Rogers: Yeah, it’s actually incredibly comprehensive. I think about it in terms of three timelines of activities that are very complimentary. So the first timeline is the early research that we do, essentially helping to define how to improve and make more effective this radio spectrum that people are now using and don’t think about, but we think about it every day. And that research is critically important because that leads to the ideas that go into standards. 3GPP, 5G, 4G, 3G, these are all technical standards.
And so the first timeline is that early research and activity that we do. The second timeline is taking a leadership role in standards. You cannot take for granted that cellular standards will always be just fine. It really should be a technology meritocracy, where the best ideas in terms of backward compatibility and looking forward to how to best utilize networks and radio spectrum resources, the best technology, the best ideas are being implemented in standards. And Qualcomm is a leader in driving standards. When you look at 3GPP, the membership organization that is interested in cellular standards, there are over 800 members. About 10 companies contribute close to 70% of the ideas that eventually form the important standards that drive 3G, 4G, 5G forward. So there are very few companies that really have the technical capability to lead that.
So the first timeline is the research, with that technical capability. The second timeline is the expertise and driving standards. And then the third timeline that we do, both on the product side and through engineering services, is pulling the technology through, through implementation. So our chip sets implement this technology. We help OEMs implement this technology. Not just handset OEMs, but OEMs across the board that make mobile devices. Our engineers go out into the world and to countries and markets all over the world and help infrastructure, equipment manufacturers, operators, and device manufacturers all pull new technology into the market and make it work.
And so Qualcomm is really all across the board of cellular, enabling cellular and enabling the mobile industry, and now other industries that are adopting mobile to take this technology forward. It’s a really very comprehensive approach to the industry,
Patrick Moorhead: Alex, as I’ve studied what it takes to be successful in 5G, I noticed a layering effect of you had to be working on some things 20 plus years ago, as 1G led to 2G, which led to 4G, leads to 5G. Can you talk a little bit about the additive nature of 5G IP?
Alex Rogers: So I think one of the first things that we see in in the 5G the, the potential of 5G, that’s being taken up incredibly fast, by the way. But the uptake of 5G, the first release of 5G, is much faster than the first release of 4G in terms of its ubiquity. But essentially 5G is about creating essentially this connective fabric. Enhancing 4G, but also creating connective fabric that will essentially connect everything together. One of the first things about 5G that’s extraordinarily powerful is what you call enhanced mobile broadband. And that’s essentially enabling more users, more data, faster throughput, and more efficient use of spectrum. So better experiences. You’re going to have better experiences and more capability to have really heavy use cases like virtual reality use cases.
The other thing that will happen will be basically exponential uptake in device to device communications. It’s really going to be extraordinarily significant. You’re also going to have incredibly increased reliability and ultra-low latency and security built into these systems. So I we move from the first release of 5G, release 15, to now release 16, which has just been finalized, and then on to release 17, you’re going to see these characteristics of the cellular capability come through. And release 16 is really where we start to push the mobile capability out to new verticals, to connected factories, connected healthcare, XR, VR capabilities. You’re basically going to see other verticals, private networks taking this up because there are features in release 16 that are designed for this. Automotive is a big focal point of release 16, the types of capabilities that we’ll see now in automotive through some cellular 5G connectivity.
Daniel Newman: It’s really interesting too, Alex. People are hearing about 5G. But listen to what you’re saying: release 16. I mean, this is so iterative, and there’s so much iteration then innovation. And I mean, there will be more releases, dozens more, before 6G, which is a real thing that I’m sure your team is working on, that I won’t even ask you to comment on. But my point is people kind of think of a standard. They think 4G, or they think 5G, and it’s kind of like it was just put out and done. And it is very much evolutionary and it continues to change and adapt and serve more purposes and deliver more value.
And as it goes on, it goes back to the discussion that we just had on R and D. There’s a continuous investment in development and research, even in the same standard, just to continue to update it and bring more value to market, to operators, make handsets more powerful, deliver next versions of VR and XR and always connected PC. And of course, everything in between making it more secure. I just think it’s fascinating, because I doubt very many people would have any idea that there’s been 16 releases.
Alex Rogers: It’s an extraordinarily iterative process. And basically what is happening is you have this early timeline of research and then it gets taken up into the standardization process. And again, both of these things are science and art. Understanding where to go with your research dollar, what improvements might actually make a difference, and then making sure, as I said, the standards organizations should be a technical meritocracy, making sure that you’re picking the best technology because it’s the best technology. And with 5G, the reason why membership has ballooned up to over 800 members, because you have all of these members coming in from outside of the traditional mobile industry who have a deep vested interest in how this evolves. Now, they may not have the technical capability to contribute, but they have a deep interest in how the standards evolve and understanding what releases are going to be devoted to what technologies. It is an extraordinarily lengthy process, without any question.
Daniel Newman: The continual releases are a fascinating watch as we go through the process of these new standards and as they come out. So that was a good clarification. I appreciate that. And I actually wanted to kind of take this down to the broad licensing business. Alex, I want to kind of understand, as you’ve had great successes. You’ve turned some challenging corners now, and it’s been a calmer year, despite the pandemic, in terms of what’s going on in the licensing business. What is the most important thing right now that you’re really focused on for this part of your organization?
Alex Rogers: Well, it has been a calmer year. I think a lot of what we’re focused on really is to continue to operationalize things in our licensing business that frankly are unique. So I’ll use that term. It’s no longer a pejorative, which is, which is a good thing. Because I, throughout my entire life, I thought unique was okay. And our licensing business does a lot, I think, that maybe other licensing businesses don’t do, and we’re going to continue to perfect the operations of those things. And maybe I can tell you a little bit about that. But there’s one big theme out there that I think is really important. And that is to help people understand the value of what it is that we do. Because a lot of the consternation about Qualcomm’s licensing business, aside from the model, which we’ve already talked about, is folks say, “Well, Qualcomm, for these SEPs, we think your royalties are too high.”
Now, the ninth circuit basically addressed that in a very effective way. But let me address it just kind of in a real world context for a second, because I think it’s important that people understand the value of what we do. And obviously there are a few other folks as well. As I said, there are 10 folks, companies, that contribute about 70% of the standards. When you look at mobile, the success of mobile, it is enormously successful. And everybody knows this intuitively, but we have over 8 billion connections in the world. We have over 5 billion unique users of mobile services, SIM connections, unique users. Last year, the GSMA said we had about $4.1 trillion in economic benefit in terms of revenue and an indirect benefit and productivity gains as a result of mobile. 4.1 trillion. If you add up all the licensing revenue that Qualcomm and other major SAP licensors realized in 2019, it would be somewhere between 8 billion and 13 billion, somewhere between 0.2% and 0.3% of that economic value.
And so people say, “Well, SEP licensing, FRAND is broken. They’re collecting too much. The royalties are too high.” They’ve completely lost sight of the success and the value of what are the essential technology and the related IP that we contribute to this. They completely lost sight of that. That actually, that difference between the 0.2 and the 4.1 trillion is only going to increase with 5G. It’s only going to increase. So we deliver tremendous value in our view. And then I can talk a little bit more about kind of the mundane about the QTL licensing business in terms of what we do that I think is unique. If you guys want me to keep talking, I’ll do that. But if you want to ask another question, we’ll be happy to get to that. I see some smiles. Is that okay?
Patrick Moorhead: Yeah. I want to hear more.
Alex Rogers: We don’t simply hand over a licensing agreement and say, “Hey, please sign here.: Okay. We do a lot because we want our licensees to succeed. And we want the ecosystem to be healthy, actually. And so we brought into QTL … One of the things that I did when I took over QTL was we brought in engineers. In fact, the first day I took over QTL, the first thing I did was ask an engineer, “Hey, are you willing to join QTL?” And we built what we call a Tech-VAS team, a technology value added services team. And so we go to our licensees and we offer … Because we want them to succeed. We don’t ask them to pay for this. We offer services to them to help them to get to market more quickly with products that are better, whether it’s RF consultation and tuning, camera tuning. We actually build labs in different parts around the world. We have four different labs in the US, China, Taiwan and India that our licensees can use for inter-op testing so that they can actually get their devices prepared to deploy to new markets around the world.
We offer IP related services. And in addition, we do things to try to keep the ecosystem healthy. We run innovation challenges in various markets around the world that have an IP focus. We help companies, new startups, obtain patents and understand the patent system. We don’t take any ownership interest in it. And in addition, given where we are in 5G, we run technology tutorials. We’ve had thousands of sessions to all the participants in the mobile industry, plus governments and PTOs, patent offices, where we basically teach them about 5G from high level to very deep scientific levels on how 5G works, because we want to help them understand 5G. And as I said earlier, we have an engineering services group that goes out and helps not only simulate how networks should be set up and operate, but actually helps implement working with operators and carriers. So QTL does a tremendous amount of work to try to help our licensees be more successful and to get out into new markets and to try to help ecosystems around the world, really understand mobile, and be more innovative and also be more IP centric.
Patrick Moorhead: Yeah. So Alex, you just gave just a litany, a list that kind of validates my positioning when I call you the orchestrator of 5G. It’s not just you cranking out a chip. Cranking out chips are important and you do that. But it’s working with the ecosystem, working with the carrier, working with the handset makers, showing up with modules that some companies won’t get to for three or four years, to prove the standard, right? Not this theoretical mathematical argument, but it’s, okay, here it is. Let’s see if it works. And a lot of people show up with their theories and their recommendations and the standards bodies make the decision on which one they go with. And I think it’s just a fascinating process. What I’d like to do is dial out a little bit and talk about pressure and challenges that you’ve faced. And we talked a little bit about Broadcom did a little bit of a news update of what hit this week with the ninth circuit court of appeals. But we also had COVID. And last time I checked, Qualcomm and the industry pulled in 5G a year early, and people weren’t supposed to be working with each other unless they were in protected environments. How did this work? How did Qualcomm and the industry do this?
Alex Rogers: So on the PO end, one of the things I … Before I get to the COVID point. By the way, everything I said about the QTL business, that is complimentary to the QCT business, which is this big engineering machine that dives in with OEMs and customers and works to basically get the guts of every device working. So this is QTL acting in a complimentary way. In terms of the challenges, there’s something that’s really important about Qualcomm, and I’m going to brag a little bit. Qualcomm … Maybe I already have been, I apologize for that. Qualcomm has faced challenges throughout its history. But when you look at the last six years, it’s hard to say that Qualcomm or any other company faced challenges like this.
And one of the things that the executive team here did under Steve’s leadership was basically say, “Okay, here’s what we’re going to do. There’s a small group of people that are going to deal with these challenges, primarily directed at the QTL business and our business model, which we’ve talked about already. Everybody else in the company, just keep doing what you need to do, which is drive the technology, focus on 5G, pull it in.” And the ability of the company under Steve’s leadership to do that was amazing, actually, with everything that we faced. And it basically is, I think, just a testament to good leadership, to be able to keep people focused on driving 5G, do all the work that you needed to do to build the products, to keep working in the standards, to keep doing the underlying research, and to do the implementation and the pull through that I talked about. So this amazing ability to just allocate the workload and focus and drive forward. Really, really a great testament to Steve’s leadership.
In terms of the COVID, when COVID came along, frankly, our it department had done such a great job of pulling through the technology that we needed. And props to Microsoft for Microsoft Teams. Basically we pivoted to Microsoft Teams in a heartbeat. It was truly amazing. And then for the folks that had to come into labs, we did all the right things that you need to do to make sure that those folks were properly taken care of, that they were really protected and their health and safety was looked after. But again, really focused leadership. This didn’t happen by accident. It happened because our IT team is really good and because when this had to happen, the executives focused on this 24/7 to make sure that it happened. So Jim Thompson, our CTO, and his team, great job.
Patrick Moorhead: Yeah, I’m always amazed at this story. And it’s funny, something stuck with me in a conversation that I had with Steve years ago, trying to get to know Qualcomm a lot better. And he says, “Patrick, what we do are the really hard things that nobody else can figure out. If a lot of people can do it and it’s easy, we’re probably not the best at it.” And in the beginning, before I really understood Qualcomm, I sort of took it as, “Okay. That’s what all the tech CEOs talk about.” But watching the trials, tribulations on the successes that I’ve seen Qualcomm in the market had, that is truly the case. Qualcomm does the best at some of the most difficult things that are out there. And that includes delivering during COVID.
Daniel Newman: And Pat, that made me think, cause you and I have had so many discussions about this. And one thing I’d love to hear from you too, Alex, is, did it slow or speed? If we kind of did a rapid fire question, because I want to get to … we have a couple more questions for you, but would you say COVID-19 was an accelerator of your business or a decelerator? And Pat, you have to remember in the wake … you and I had that discussion, what was going to go faster and what was going to go slower. I have my take on what I think you’re going to say, but what’s the consensus within the QTL business?
Alex Rogers: As I say, QTL is just the suit for our engineers. We’re the suit that goes out to the market. And as I said, we look to get a fair return for what our engineers create. In my view, the engineering group, particularly the group that focuses on that fundamental, essential technology, that’s the bedrock of QTL. With those folks, it was an accelerator. It was actually amazing. When you look at the invention disclosures that were filed, these are the things that essentially start the queue towards patent filings. There was a huge jump as soon as COVID hit. And why? Because people were traveling less. People were, as you guys know, you’re kind of stuck to your desk at home. There’s no distractions. There’s nothing for you to do. You can’t go outside. And then boom, you have this huge jump in creativity because people have more time to be creative and actually put their invention down.
With the licensing business, conducting licensing negotiations remotely through video calls, it’s difficult to do that, actually. It’s very difficult to do that. I think being there in person matters and makes a difference. But a lot of credit to our negotiation teams. We managed to do it. And what that means, particularly when you’re working with Asia, what that means is that you don’t get a lot of sleep because you’re working during your day and then you’re working at night. And so a lot of folks within QTL burned the candle at both ends early in this year to get a bunch of agreements signed. So for that, I wouldn’t say it was an accelerator, but we didn’t slow down.
Daniel Newman: Yeah. I was amazed the carriers were still doing their thing. And the amount of base stations that were showing up specifically in China was staggering. So Alex, we’re coming up a little bit on time here, but what I’d love to do is ask you if you have any closing comments. I feel like we’ve gone around the world of IP here. And I think for many listeners, have definitely opened up their eyes to a very important part of Qualcomm’s business. So any closing comments?
Alex Rogers: I think it’s hard for people to imagine how ubiquitous and game-changing 5G is going to be, but it will be. And so let me just step back and come up with an example that I think is a much watered-down sample. About 42 years ago, they started launching GPS satellites. And so GPS became a thing, right? And I read an article recently that GPS accounts for about $1.8 trillion worth of kind of economic activity today. And think about it: a GPS has changed your life. It really has. The ability to have products and services that are enabled by GPS has really made a difference. That’s going to pale in comparison to what 5G is going to do. It really is. The impact of 5G, once it’s fully deployed, is going to be enormous, when you have this mesh of connectivity throughout the world, you have private networks, you have factories going wireless, you have all of this capability.
The automobile industry is going to change. Automobile manufacturers are going to have … they’re going to be enabled to have relationships with their customers. You’re going to have massive decreases in accidents, in deaths resulting from accidents, in injuries, in CO2 emissions.
And a lot of this is going to be enabled by 5G. So I think we’re really on the cusp of something revolutionary. And there really isn’t an understatement when folks say this is going to be the fourth industrial revolution. And Qualcomm’s really happy to be at the core of that. And we’re very happy to kind of move past this criticism of our model because we think our model helps drive that innovation. And our mission is to get that innovation out into the market. So we’re looking forward to doing it.
Daniel Newman: I wrote a piece sometime in the middle of COVID where I talked about the impact that conductivity had on our ability to sustain some sense of normalcy, and to have imagined … Obviously, part of what actually got the consensus to get us to a point where there was so much information that we locked down and shut down, probably had something to do with information. But then in the wake of it, whether it was binging on Netflix, whether it was being able to bring our offices, businesses like Pat and mine, and as a research firm, being able to continue operations, your team being able to license your technology to pretty much every major handset maker in the world throughout this process of not even being able to send your Salesforce out to do traditional meeting. It’s been a pretty amazing journey, Alex.
And we are out of time here, but I do want to say, I think, on behalf of both Patrick and I, thank you so much for sharing it. I mean, from the very beginning of the show, it takes a lot to get someone in the legal profession to open up, be honest, and almost share a joke or two. I always laugh, there’s just a certain posture when you meet people in that profession. So thanks for bringing a little wit and a little bit of humor, but also thanks for bringing such a comprehensive perspective on what’s going on in the licensing business and what Qualcomm is doing to influence 5G and global connectivity.
Alex Rogers: Wow, thank you. I really appreciate you all giving me a chance to talk. And I have kind of forgotten how to think like a lawyer over the last four years. So maybe that’s helping my personality a little bit. I don’t know. I’ll go home and ask Mazy and see what she thinks.
Patrick Moorhead: Great words to end this on, Alex. I want to thank you as well. And for Patrick Moorhead and Daniel Newman, signing off for a special Insider Edition, we just want to thank Qualcomm and Alex Rogers, Qualcomm’s EVP and President of QTL. If you like what you heard, press that subscribe button and we will see you next time.
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