Qualcomm’s New Chipsets and the New Android Premium

Qualcomm has announced a series of new Snapdragon processors ahead of the Mobile World Congress. There are a few key takeaways and observations to be made about these new chipsets.

This quote from Qualcomm’s press release is key:

“It has always been Qualcomm Technologies’ strategy to introduce industry-leading features first at the premium Snapdragon 800 tier design point, and then scale these features into our Snapdragon 600, 400 and 200 products, so that we can help our customers deliver great user experiences to cost-conscious consumers,” said Alex Katouzian, senior vice president of product management, Qualcomm Technologies.

As I pointed out in this analysis on ARM’s new A-72, ARM is essentially bringing a standard and more premium set of specs to their generic SoCs, which makes it harder for companies like Qualcomm to sustain their premium products as an architectural licensee. But, Qualcomm is similarly in a position to trickle down their innovations to lower price points, and often very quickly.

However, the big differentiator, and the thing Qualcomm can ride for some time, is their modem technology. When I think about where the world is with broadband, it feels like modem technology is still in the mHz years of CPU technology. During that time, each new performance gain was realized observationally. We could notice our software open faster, or crunch data faster with each new Intel processor. Similarly, there are many parts of the world where bandwidth is painfully slow. Consumers will be able to observe their devices getting faster as carriers and chipsets support faster speeds. This is where Qualcomm can continue to attract customers to their SoCs over the offering from generic ARM vendors. Importantly, with these products they are bringing the top line modem technology all the way down to their Snapdragon 425, which essentially enables smartphone manufacturers to hit a wide variety of price points with flagship modem speeds. This rapid trickle down of their current generation modem technology all the way to the 4xx range processes is one of my most important take-aways from this announcement.

The elephant in the room related to Qualcomm is around their custom ARM architecture called Krait. To get 64-bit out the door faster, Qualcomm elected to use the generic ARM cores rather than customize the ARM architecture with their own Krait architecture, which they have the capability to do as an ARM architectural licensee. We have yet to see Krait on the 800 series processors and, given the quality of the A-72 and rapidly commoditization of the smartphone market, a key question is whether it is worth it for Qualcomm to spend the resources to bring Krait to this lineup going forward. I’m certain there is an argument to be made for and against continuing with Krait which I will engage in at some point in time.

Ultimately, I am bullish on this lineup based on the advancements in modem technology where Qualcomm continues to have a lead. Now that the issues related to China are resolved, I think Qualcomm is poised for a solid 2015, especially as new markets evolve quickly to 4G where Qualcomm SoCs have a distinct advantage.

With many things I have talked about regarding the premium smartphone market being nearly locked up by Apple, it seems the new area for many component manufactures to compete is the middle. Meaning premium in Android has shifted from $500 devices and above, to devices in the $300-$400 price points. This is a fascinating development and one that has smartphone brand and component manufacturer competitive demise which we have not seen yet in this space.

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Ben Bajarin

Ben Bajarin is a Principal Analyst and the head of primary research at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research and he is responsible for studying over 30 countries. Full Bio

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