Though it's better known for its smartphone processors and modems, Qualcomm (QCOM) - Get Qualcomm Inc Report now does a significant amount of business selling processors, cellular modems and Wi-Fi and Bluetooth connectivity chips for deployment in places such as factories, hospitals, retail stores and warehouses.
The mobile chip giant is now looking to take things a step farther, by rolling out what it calls its IoT Services Suite. The “suite” consists of end-to-end solutions -- encompassing hardware, software and services -- for embedded computing and connectivity that are tailored for various industries and verticals, and which will be offered in partnership with various third parties.
Initially, Qualcomm is rolling out just five such solutions, respectively targeting healthcare, education, construction management, logistics and “smart cities and spaces.” However, Sanjeet Pandit, the head of Qualcomm’s smart cities efforts, told TheStreet that 30 offerings will eventually be rolled out, with “four or five” launching per quarter going forward.
“We could go to the IT teams of airports and ports and campuses and hospitals, and work with them to kind of digitize a workflow,” Pandit said. “We will be the one-stop shop. We would be the company that would run the managed services along with our partners, and deliver it as a complete end-to-end solution over a period of time.”
“We're systems engineers, we think in terms of end-to-end systems [and] end-to-end solutions. And our technologies and products serve those end-to-end use cases,” added Jeff Lorbeck, GM of Qualcomm’s IoT business unit. “And now we're taking $66 billion in [cumulative] R&D and applying it beyond the mobile wireless space to virtually every conceivable market segment. Because, really, we live in an analog world, [and] it is being digitally transformed.”
I had a chance to ask Lorbeck and Pandit some questions about the IoT Services Suite, as well as about Qualcomm’s broader IoT efforts. This follows an interview I did in October with Qualcomm President Cristiano Amon about the company's 5G infrastructure efforts, and a July interview I did with Alex Katouzian, Qualcomm's SVP of mobile, about the company's smartphone chip efforts.
Here are Lorbeck and Pandit's comments on several topics of interest, slightly edited for clarity.
Which other verticals the IoT Services Suite will target:
Pandit: “We're going to be doing smart warehousing...vaccine management, smart agriculture. We're going to be doing a lot of things [involving] livestock, cattle management. So, cattle management as a service. Believe it or not, in Thailand we are working very closely with an operator to do chicken farming.
"[We're also targeting] smart mining, oil rig management, and..smart university campuses...Senior citizen homes as a service, [and] remote monitoring for factories.”
How Qualcomm is partnering with software firms for this initiative:
Lorbeck: “It's really software at every single level. Everything down from firmware, real-time operating systems, high-level operating systems [such as] Linux...and the software that runs on the device. So real-time embedded systems, and the device level software, all the way through the cloud application, and everything in between."
"So there are partners really at every level [from] hyperscale cloud giants, for the cloud-based applications, all the way down through the firmware and everything in between."
Which Qualcomm products will go into the hardware used by the IoT Services Suite:
Pandit: “One thing is for sure -- when you're running the IoT Services Suite, there will be times that there will not be a Qualcomm solution...But the majority of the hardware that we are bringing in [has] Qualcomm silicon -- I will say 80%-plus -- and we [supply everything] from something like a 9205 chipset, which [supports LTE] Cat-M and [narrowband IoT], to maybe [the Snapdragon] 845 for Smart Lighting, which...has an AI engine in it."
Lorbeck: “[We sell] everything from just a standalone Bluetooth chip, or a Wi-Fi chip, at one extreme, all the way up through our most advanced, premium-tier processor with integrated 5G, and literally every tier in between.”
“If you follow Qualcomm, you know we have on the mobile side a [Snapdragon] 200 tier, a 400 tier, a 600 tier, 700 tier, 800 tier. We use all of those tiers in the service of these digital transformation use cases. So the IoT unit offers products across a huge range of levels of sophistication and complexity.”
IoT end-markets that have been particularly strong for Qualcomm post-COVID:
Lorbeck: “One area where we're seeing just an explosion of interest is multimedia devices used in home offices and in home school rooms...So companies that make cameras, for example...Cameras are becoming more sophisticated, even for the home office. Things like that were actually accelerated with COVID.”
“[Also,] home gym products that have screens and displays. So there are some areas that are really just exploding in chipset volume, but really in end-use interest.”
Pandit: “One area, [in terms of] full-blown, end-to-end requirements, has been smart education...And also, remote patient monitoring for senior citizens. That has taken off."
How Qualcomm sees cellular and Wi-Fi networks coexisting in IoT environments, and how private 4G/5G networks are being deployed to support them:
Pandit: “There has to be a coexistence and a coexistence of technology issue for sure...There has been a surprising increase of not only [private 4G network] endpoints, but proposals that we are putting together for cities, airports and ports where they are looking to run their own private LTE networks in the CBRS band -- to take their destiny of their own hands, run their own services…[and] not only keep their own revenue, but offer services or get additional revenue.”
Lorbeck: “Some time ago, there was a raging debate between cloud and edge [infrastructure over] is the future a cloud future or an edge future? Well, it turns out the debate is over. It's both.”
“In just the same way, the future for wireless connectivity is going to include technologies that have been deployed under 4G like narrowband IoT. It'll include 5G, it'll include Wi-Fi. There are different use cases, different applications [for] private 5G networks...There are some use cases that can only be enabled [by] 5G. And some industries, for example, will want their own private networks to guarantee a quality of service, as well as the security of their data, [because] they don't want the data going over a public network.”
“So we anticipate that factories, for example, may deploy 5G, when they require ultra reliability with low latency...Sub-millisecond latency with five [or] six nines of reliability, simultaneously. 5G enables [this], other technology doesn't.”
“In the future, I think you're going to see a mix of connectivity technologies, depending upon the location, the use case, the application...The good news is, we have leading technology in all of those [areas]. So we're somewhat agnostic. It's like, well, let the best connectivity [technology] win. Or let the best connectivities [win], where multiple connectivities are operating in parallel.”
Whether Qualcomm sees additional opportunities to partner with public cloud giants on edge computing solutions that process data generated by IoT devices leveraging Qualcomm’s connectivity offerings:
Lorbeck: “The answer is yes...I think it was IDC that came up with a report some time ago in 2018, [saying] there was an estimated 33 zettabytes (33 billion terabytes) of data generated...and their prediction was [that] by 2025 it'd be 175. So from 33 to 175 zettabytes of data."
“All of this data can't be sent up into the cloud. A significant amount of the data must be processed on the device, or at the edge. And...we're on our sixth generation of neural processing now in our premium-tier [Snapdragon] chipset; we announced that at the [Snapdragon Summit] last week.”
“We can process a massive amount of data using artificial intelligence algorithms right on our devices. So machine learning, deep learning. computer vision, right on a smart connected camera...So we're not just connecting things with modems, we're actually doing a lot of the computation right on the device.”
“But as a systems engineer, I can tell you some systems designs can be optimized by processing the data at the edge, on the device. Some at the near edge. So we have something called the Cloud AI 100. 300 or 400 [trillion operations per second]. And in some cases the system design and the solution will require sending some of the data into the cloud."
"So really it's a continuum of where the data [is] processed, and where the insights are gleaned from [the] data. So it's not one or the other. It's going to be on the device, at the near edge, up in the cloud. And quite likely, a lot of the algorithms will require multiple [locations].”
How 5G adoption is driving higher attach rates for Qualcomm’s RF front-end chips for its modem design wins for IoT hardware:
Lorbeck: “RF is really very complicated. And it’s even more complicated [with] 5G...Companies making industrial handhelds, as an example, they're using 4G chipsets. They're going to transition to 5G chipsets. So we're already working with those companies to make this migration from a 4G solution to a 5G solution.”
“And yes, [with] those solutions overwhelmingly we're seeing attach of the RF. Because of its complexity, because of the fact that we have this solution that's very comprehensive. It enables global solutions, truly global solutions. So, super high attach rate on our 5G [design wins].”
The breadth of Qualcomm’s IoT customer base, which was said to include 11,000 direct and indirect customers as of Nov. 2019:
Lorbeck: “One of the goals of the IoT business in QCT (Qualcomm’s chip unit) has been to create an ecosystem that enables our solutions to get to market through a lot of partners. Through module vendors, distributors, ODMs, systems integrators."
“IoT is just inherently fragmented. There are thousands, if not tens of thousands of use cases. And there is no possibility of Qualcomm supporting all of all of these thousands and tens of thousands of use cases directly. So we've had to cultivate the ecosystem, in just the same way that Sanjeet is describing. He's enabling a smart city and smart connected space ecosystem.”
“So as it turns out, because of [a] high level of fragmentation, no single customer has a large double-digit percentage of our [IoT] business. In that respect, it's quite different from our mobile business, where there is a small number of large customers. In the case of IoT, it's a large number -- a much, much, larger number -- of smaller customers."
“[This] provides opportunities and challenges in terms of getting to market, but it creates an incredible level of stability. It's something called the law of large numbers: If you have a lot of things contributing to a big result, then each one individually can go up and down. But overall, it's a very stable business because no customers have this really large, double-digit percentage of our market share.”