Apple. Samsung. Qualcomm? Chip Maker Solicits Consumer Love

SAN DIEGO, CALIF. (TheStreet) -- When consumers think of the sexiest names in smartphones, Apple (AAPL) and Samsung (SSNLF) surely come to mind, but Qualcomm (QCOM) most certainly doesn't. Should it?

The San Diego-based chipmaker, which powers many of the world's smartphones and tablets including chipsets inside the new iPhone 6 and 6 Plus,, seems to think so as it's renewed a campaign to educate consumers on what it means to have a top-of-the-line Qualcomm chip inside their devices. Thursday, the company invited media to see, and obviously share with their audiences, for the first time exactly how the slew of impressive capabilities enabled by its next-generation mobile processor, the Snapdragon 810, work in real life situations.

The mobile processor, itself, is not new. Announced in August and slated to appear inside smartphone makers' flagship devices in the first half of 2015 (perhaps in the Samsung Galaxy Note 4), the Snapdragon 810 is a chipset on steroids and comes with 64-bit computing, 3x20 megahertz fully integrated carrier aggregation, 20 nanometer technology, an Adreno 430 graphics computing unit, a Hexagon V56 digital signal processor, and an integrated 4G LTE Advanced CAT6 world mode modem.

To which, the average person's most common response will be, "Huh?"

"Qualcomm is building the next generation experiences that are going to power the premium smartphones of 2015," Tim McDonough, vice president of marketing, told TheStreet. "We're doing the event to help the industry transition away from specs to showing off the new user experiences that are possible here."

In other words, if the consumer is to understand that the 810 will bring with it the coolest features imaginable, then showing off a device with a crystal clear resolution, 3-D video gaming with zero hiccups, or DSLR-quality photo capture would resonate better.

Hence Thursday's media showcase, which took place in a penthouse at the Standard Hotel in New York, NY. and consisted of special setups in each room to demonstrate how the Snapdragon 810 processor works in real-life scenarios, say when you want to beam 4K-captured video wirelessly to a television set without degradation, fully recharge your phone in 75% less time, take pictures that are insanely clear, or cancel out background noise when making calls or shooting video.

Of course, with the company hush-hush on the OEMs who will use its coming-to-market processor -- though the "usual suspects" are working on 810-based devices, McDonough said -- demonstrations were done using a Qualcomm-produced demo unit running Android. Still, physical evidence is better than stats on a sheet of paper.

"Just the precession and resolution on the screen really provides you a degree of user experience that seeing is believing," Murthy Rendunchintala, Qualcomm's executive vice president of product, told TheStreet.

Plus the appeal of 4K baked into everything you see and do on your device, and the 810 mobile processor supports 4K natively across a smartphone's architecture, is likely to become more tangible to consumers, especially given that ultra high-definition screens are becoming the norm. There are around 150 million smartphones that can capture 4K images today, with half a billion coming by 2018, Rendunchintala said as proof that consumers' expectations are changing.

"The absolute center piece of what we're doing on the Snapdragon 810 is bringing 4K native content to the mobile experience. We really see the mobile driving the evolution of the transition to 4K because we see the key stimulus to that being user-generated content, either through video or camera capabilities," he said.

It's hard to tell why, exactly, Qualcomm feels the need to be the messenger that gets people excited about what's in store for next year's high-end smartphones. It's not as if the company's business, which is based around licensing fees and chip sales to OEMs, depends on it. The overall Qualcomm Chip Technologies (QCT) business grew by 12% and pulled in $18.67 billion during the full fiscal year 2014, representing nearly 72% of total revenue. Plus, Wall Street analysts are already a believer in what the company's mobile processors can do.

"Qualcomm's Snapdragon processor portfolio continues to set the standard at the premium tier and now has options across all tiers, resulting in over 1,080 devices announced/available in FY14," Bank of America Merrill Lynch (BAC) analyst Jack Graham wrote in a recent analyst's note.

"Based on continued Snapdragon and thin modem momentum in F2015 ... we anticipate healthy QCT sales growth during the next several years," Canaccord Genuity analyst T. Michael Walkley echoed in his firm's Nov. 19 note. "Given the shortening smartphone product cycles and challenges of LTE given all the disparate bands around the globe, we believe OEMs will continue to rely on Qualcomm to help quickly launch new LTE smartphones in new markets."

In November, the semiconductor company, after a disappointing September quarter, used its analyst day to paint a rosy outlook for 2015 and beyond, telling analysts that, despite ongoing issues in China, its five-year compound annual growth rate (CAGR) will be between 8% and 10% per year. Earnings per share will grow at an even faster clip, CEO Steven Mollenkoph said at the time.

So does it really matter whether the average Jane understands what Qualcomm's chipset can do? In the end, it's all about creating more demand for high-end phones -- read: higher average selling prices that improve Qualcomm's profit margins -- so Qualcomm's actual customers, the OEMs, are incentivized to ramp up production.

"We're investing for our customers," McDonough said, "so they can sell more devices next year."

--Written by Jennifer Van Grove in San Diego, Calif.

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