Delve into the fascinating origin story of Qualcomm, a multinational semiconductor and telecommunications equipment company that revolutionized the wireless communications industry.
This episode explores the company’s journey from its roots in Linkabit, its strategic entry into the market, and its development and patenting of Code Division Multiple Access (CDMA), a transformative technology in telecommunications.
Linkabit’s Legacy
Linkabit, co-founded by Irwin Jacobs and Andrew Viterbi, developed a video scrambling system for pay-TV on cable systems, addressing early security issues.
Despite its acquisition by M/A-COM in 1980, the founders’ experience at Linkabit laid the foundation for the creation of Qualcomm.
The Revolutionary Nature of CDMA
CDMA, as the first technology that allowed for the use of all available frequencies at once, was a significant departure from previous systems that required specific frequencies for each transmission.
This revolutionary nature of CDMA marked a significant innovation in the telecommunications industry.
Strategic Execution
Qualcomm’s brilliant strategy and execution were a result of the founders’ background and engineering skills, as well as being at the right place at the right time.
The company’s success story serves as an example of how strategic planning and execution can lead to significant breakthroughs in an industry.
The Analogy of CDMA
CDMA can be likened to people whispering to each other in different languages in a large house.
Each person can understand the messages intended for them, despite the cacophony of simultaneous conversations.
This analogy effectively illustrates the efficiency and uniqueness of CDMA technology.
Bootstrap Strategy
Qualcomm’s initial strategy was to bring terrestrial cell phone networks into the digital era.
However, they knew they couldn’t achieve this immediately.
Thus, they started by doing consulting work to bootstrap their operations, which allowed them to gain experience in consumer mobile telephony services.
Birth of Qualcomm
Recognizing the potential of the burgeoning wireless communications industry in 1985, Jacobs, Viterbi, and five other engineers from Linkabit founded Qualcomm.
The company focused on revolutionizing the cellular telephone industry by replacing the limiting analog technology with digital technology, thereby increasing bandwidth efficiency.
The business history of Qualcomm is one of the most brilliant strategic executions of entering a market period. – Bill Gurley
Strategic Challenges
Qualcomm’s founders faced a strategic challenge in determining their scope within the cellular telephone network industry.
They chose to focus on developing the technology for phones to communicate with towers, which required engaging various stakeholders, instead of trying to control the entire network infrastructure.
Bootstrapping Qualcomm
The founders initially bootstrapped Qualcomm by doing consulting work, a strategy similar to their approach with Linkabit.
This allowed them to fund their research and development efforts and eventually realize their vision of digital cellular communications.
Birth of CDMA
During their consulting work, Qualcomm developed Code Division Multiple Access (CDMA), a technology that allowed multiple conversations to access the same channels simultaneously.
This innovative technique revolutionized the telecommunications industry.
CDMA vs FDMA and TDMA
CDMA was a progression from Frequency Division Multiple Access (FDMA) and Time Division Multiple Access (TDMA).
Unlike FDMA and TDMA, CDMA allowed all messages to be encoded digitally and sent simultaneously across all channels.
This method maximized the efficient use of the spectrum allocated.
CDMA’s Efficiency
CDMA’s efficiency lies in its method of encoding packets of information and transmitting them over the same digital signal.
This approach does not require high power, which is beneficial for battery life, making CDMA a more efficient way to use a given medium for maximum signal transmission.
The Value of CDMA Patent
Qualcomm patented the method and technique for applying CDMA to terrestrial cellular networks in 1986, years before it became directly involved in the cellular industry.
This patent is considered one of the most valuable patents in history due to CDMA’s transformative impact on the telecommunications industry.
