Qualcomm Is Poised To Punch Above Its Weight

Qualcomm HQ office in San Diego

There have always been lots of rumors and speculation about Qualcomm Technologies’ strategy, future, and direction. However, with all the unknowns and newfound freedom from the failed NXP acquisition, Qualcomm has done a good job of regrouping and regaining momentum within The Internet of Things (IoT) marketplace. Recently I was fortunate to attend Qualcomm’s analyst workshop in San Diego. At the event, Qualcomm’s SVP and CMO, Penny Baldwin, gave a candid “state of the union” address to the analyst community on the company’s strategy. In the past, Qualcomm was perceived by many to be just a patent license factory. If the company executes correctly on the strategy outlined at the analyst workshop, it will soon be regarded as an actual product company that solves business and technology challenges within diverse market segments.

Qualcomm recently announced several IoT successes across several business verticals, including manufacturing, retail, supply chain, enterprise, and energy/utilities. From a validation perspective, this is significant as each of the above industries is aggressively exploring the benefits and efficiencies IoT offers—especially at the edge and with industrial devices. Qualcomm has a solid strategy to address these markets. As a result, Qualcomm is on track to double its IoT revenue for the fiscal year versus two years ago. Qualcomm Technologies anticipates its opportunity in the Industrial IoT will grow at an approximately 20 percent CAGR over the next 3-4 years. I think the company’s estimate is too conservative; I believe that it will grow at a 25-30% CAGR over the next few years. As the number of IoT deployments move from proof of concept (POC) to production, the demand for connected devices will explode.

Without NXP, Qualcomm must get scrappy in the self-driving cars market

One of the areas where Qualcomm is falling behind is the autonomous vehicle market. The acquisition of NXP would have put the company in the driver’s seat, both literally and figuratively. In the short-term, it will be difficult for Qualcomm to keep up with the likes of Intel and NVIDIA, but that doesn’t mean there aren’t other acquisition opportunities to make up lost ground.

Security is at the core of Qualcomm’s IoT strategy

Security is one of the primary constraints for IoT growth. Qualcomm has a solid security strategy for IoT and edge computing, especially at the chip level. Security at the edge is one of the oft-overlooked components in most IoT platforms and solutions. Edge computing refers to when the data processing happens closer to the source, such as inside a gateway, meter, sensor, etc., versus in the cloud. Qualcomm’s integrated hardware security strategy, from the chip to the cloud, consists of five primary components.

  1. Software integrity ensures software running on the device is from a trusted source and has not modified or compromised.
  2. Data protection helps secure both “at rest” data stored on the device and “in-transit” data on its way to the cloud.
  3. Remote security, firmware upgrades, and lifecycle management allow for the ability to update patches and respond to incidents or vulnerabilities without having to deploy a technician.
  4. One of the most significant attack vectors in IoT is where the device connects to the data center. Device-to-cloud authentication and trusted device attestation enable the cloud to determine if the connected device is what it says it is, whether it can be trusted and if it has been compromised.
  5. Roles, permissions, and authentication are the rules and limitations given to edge devices governing what they should or should not do. Authentication is essential for edge devices that have multiple users, in order to understand who is interacting with the device and what they have permission to do.

Qualcomm’s security story is a differentiator, especially from the chip to the cloud. The company’s wireless edge services will offer a clear path for customers to manage edge devices wirelessly, solving a major challenge for deploying IoT at scale.

There is no doubt Qualcomm has taken its share of lumps, but nevertheless, the company remains determined and is realigning for success. In my opinion, IoT and device security will be the areas where Qualcomm will demonstrate immediate wins, from both a market share and revenue perspective. Further, from what I saw at the analyst event, the team appears invested and engaged in the company’s future success and innovation. The combination of a common goal with a solid team will no doubt help Qualcomm in the long run and provide greater shareholder value.