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Snapdragon blitz

QUALCOMM INC.

CEO: Paul Jacobs.

Revenue: $14.96 billion in FY 2011; $10.99 billion in FY 2010.

Net income: $4.26 billion in FY 2011; $3.25 billion in FY 2010.

No. of local employees: 10,509 as of Aug. 1, according to the San Diego Business Journal’s 20 Largest Employers list.

Headquarters: Sorrento Valley.

Year founded: 1985.

Stock symbol and exchange: QCOM on Nasdaq.

Company description: Fabless manufacturer of semiconductors for cellphones and other devices; and developer/licensor of wireless technology.

Key factors for success: Continuous innovation of products; variety of products; stable management; significant investment in research and development.

Follow me, say the big letters on the back of a city bus, to Snapdragon Stadium.

San Diego commuters and the nation’s football fans have seen the Snapdragon name a lot more, since Qualcomm Inc. temporarily renamed the stadium in Mission Valley after its brand of versatile, all-in-one smartphone chips.

By renaming the stadium for three games — a regular season San Diego Chargers contest and two bowl games — Qualcomm exposed an estimated 30 million television viewers to the Snapdragon name, not to mention 150,000 people in the stands.

The temporary Snapdragon signage is down, but the marketing push is not over.

“You’ll see a lot more from us” in the coming year, said Raj Talluri, vice president of product management with Qualcomm CDMA Technologies, the company’s chip-making business segment.

Without a doubt, the experience left some armchair quarterbacks scratching their heads over just what Snapdragon is.

Versatile Microchips

Snapdragon is a line of microchips that go in smartphones, tablet computers and, in the not too distant future, televisions. Snapdragon works inside many devices running Google Inc.’s Android operating system.

On top of performing basic cellphone functions, Snapdragon chips serve as a computer operating system, letting smartphone users go through their days checking email, listening to music, taking still photos or watching video.

If done correctly, the chip and the device will operate “fast and snappy,” Talluri said. The experience of going through email will rival mail management on a personal computer. The experience of operating a camera will be indistinguishable from using a point-and-shoot device, with no processor lag.

The user experience is paramount, Talluri said.

However, the Qualcomm chip has to work in an environment with limited resources. Qualcomm engineers need to create a chip that delivers a rich experience and works quickly, but sips battery power instead of drinking it like an exuberant tailgater in the stadium parking lot.

The device running on the Snapdragon chip has to make it through an owner’s busy day to the next overnight charging session, Talluri said. “That’s challenging,” the engineer said.

Challenge of Conserving Power

Talluri said Qualcomm goes after the challenge by assigning large teams, who have knowledge in a variety of fields, to the chip-design project.

One way a Snapdragon chip conserves power is by shutting down sections that don’t need power at the moment. Competitors employ that strategy as well. “That’s what everybody tries to do,” Talluri said. “It’s just that we do it better than most people, because we’ve been doing it for a long time, and we have a lot of people who are specialized in that.”

Qualcomm has improvements in the wings.

Dual-core Snapdragon chips are already on the market; Qualcomm is preparing to launch a quadruple-core Snapdragon chip soon.

Snapdragon chips will also power devices running Microsoft Corp.’s up-and-coming operating system, called Windows 8. In addition, Qualcomm expects Snapdragon chips will be able to power “smart TVs,” which can host video games without the need for a separate console.

Analyst Jim Kelleher of Argus Research Co. notes Qualcomm follows a common industry habit of producing multiple versions, or “tiers,” of its chips. The San Diego company makes variations with more features for high-end handsets, and fewer features for mass-market handsets.

There are four tiers in the Snapdragon line. Smartphones running Qualcomm’s high-end S4 model chip will be out this year, Talluri said.

Qualcomm is “unmatched” in its tiering strategy, Kelleher wrote, adding that positions the San Diego company for growth.

In mid-2011, Qualcomm had more than 51 percent of the smartphone applications processor market, said the Argus report, citing data from Strategy Analytics.

Advantage Over Competitors

Qualcomm’s competitors in the chip space include Intel Corp., Nvidia Corp. and Texas Instruments Inc. Qualcomm’s advantage over those other players, Talluri said, is in “integration” — that is, in its ability to combine a processer with various radio communications electronics on a single chip, in ways that competitors do not.

Argus and Strategy Analytics reported that Samsung and Marvell also compete with Qualcomm in the smartphone chip space.

Vendors sell 400 million smartphones per year, Talluri said, and they will likely sell 1 billion per year by 2015. “Lots of consumers really want to know what they’re buying,” Talluri said.

Granted, Qualcomm’s customers are not mom-and-pop consumer, but the companies that buy chips in large numbers, then combine them with other electronics to make handsets.

Nevertheless, those business-to-business customers benefit from the Snapdragon marketing push, Talluri said, particularly once consumers start caring about their smartphone’s inner workings.

“What’s inside the handsets is just as important” as the handset’s brand, Talluri said.

After all, he said, the Snapdragon chip is “really delivering the experience.”

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