The Windows Opportunity for Qualcomm

With both Microsoft and Qualcomm publicly discussing the re-emergence of mobile processors from Qualcomm running the Windows consumer desktop operating system, it seems as good a time as any to dissect what this might mean for the industry and the major players involved. Windows 10 running on Qualcomm processor platforms in tablets and notebook form factors brings with it some incredible opportunities for all involved, including the consumers they are targeting, with a focus on areas the Windows+Intel relationship has neglected for some time. But with that comes substantial risk and many avenues of potential conflict when these systems begin to hit the market the end of this year.

The Opportunity
Let’s start with the positive outlook and dive into why the Qualcomm and Windows 10 story makes sense and how both the market and consumers will benefit from this new arrangement. Differentiation is the key to success and Qualcomm is well aware this move into the notebook consumer and enterprise markets requires more than just creating another line item on a CDW quote sheet. Even though the first thought for many analysts will be to measure the effective benefit of power consumption and battery life, for me the most important aspect of Qualcomm’s venture is in connectivity. Each and every mobile platform built with Qualcomm processors, starting with the Snapdragon 835, will ship with a Gigabit-class LTE X16 modem. While a very small and niche market of enterprise users have WAN connectivity today, to the general consumer a cellular-connected notebook is a first.

Depending on how Qualcomm, Microsoft, the partner OEMs and the carriers work this all out, messaging around LTE connectivity at Gigabit-class speeds is a considerable advantage. Not worrying about Wi-Fi hotspots in airports, restaurants, classrooms and offices and instead relying on the same service and capability as your smartphone without the hassle of hotspots will bring about a revolution in the connected notebook. How cell phones changed our expectations of mobile communication, so will the always-connected capability of a Windows 10 machine to business and consumer users.

Battery life advantages should not be overlooked though. The Snapdragon SoC has the potential to draw much less power than the competing Intel Core m3 series of processors if configured correctly while still offering enough performance to alleviate concerns in the Windows environment. Battery life is a key driver of notebook innovation, along with form factor and design, and though details are sparse today, Qualcomm should be able to bring an improvement here.

Though as much of a challenge as an opportunity, Qualcomm has the ability to spurn the Windows RT fiasco with this launch and put products out, with OEM partners, that are seen as high quality. This means good displays, solidly constructed bodies, high-performance I/O, and trackpads that rival the best in the space. All of this is going to be necessary to pull in customers used to the standards of machines like the Dell XPS 13, Microsoft Surface or HP Spectre. Working with partners to avoid low-cost, flimsy feeling hardware re-opens the premise that Qualcomm and ARM-based platforms are viable work machines.

The combination of Gigabit-class LTE connectivity and longer battery life, coupled with Windows 10 (and universal application support) opens a door for Qualcomm to walk thorough and take a seat at the table.

Potential Problems
As much as the connectivity story of Qualcomm and the X16 modem could be the driving force behind adoption based on the reaction and integration with carriers, it could also be a hindrance to consumers. In a space with limited capacity data plans and speeds that get throttled based on usage, not to mention the potential conflicts pending from net neutrality governmental debates, if the data package isn’t sold fairly and easily, consumers could balk. An always-connected device is useless if you have to jump through hoops to get it connected or if the cost is overly prohibitive for any non-executive class buyer.

Even with the leveling off of performance for the Windows notebook market, Qualcomm and Microsoft are going to need to address the question of performance on this hardware. Does the Snapdragon platform have enough horsepower to drive the operating system and its native Windows Store applications? And how does the binary translation/emulation layer affect the user experience for the non-AWP programs? Qualcomm doesn’t have to win in this area, just be close enough to get the job done. The bar will be set at different levels for different target demographics – education, business, casual consumer – but overcoming the previous Windows RT performance stigma should be at the top of Qualcomm’s list.

Another big problem comes from the primary competition here: Intel. Intel has had the notebook space to itself for a very long time but that does not mean it has become complacent. Even though Qualcomm was able to prove to be the better design and architecture for mobile devices, it is moving into Intel’s home turf now. Though the 10nm advantage Qualcomm has with Snapdragon means something, the tight integration of Intel and its in-house manufacturing give it an ability to adapt that few companies in this world can. Taking physical and architectural capability out of the discussion, Intel also has considerable financial and channel advantages over Qualcomm. Marketing funds and inventory balancing are subtle tools utilized throughout the PC market and Qualcomm hasn’t proven it has the ability or desire to engage in the same way.

Expectations
Ironically, many of my expectations for the Qualcomm and Windows partnership in 2017 will depend on outside forces at work. With the recent announcement of Windows 10 S, a free version of Microsoft’s OS that targets not only low-cost Chromebook competitors but even ~$1000 notebooks for consumers, Qualcomm may feel the need to address the $600+ range of machines with Snapdragon and the sub-$400 market to take advantage of Microsoft’s re-engagement with the education community. Attempting to cover too many areas on initial launch could be a huge drain on resources and I would expect Qualcomm to instead sell a product with premium, and unique, feature sets.

Which leads me to another prediction around carriers. Though nothing has been announced yet, increased competition between all the US and international cellular providers, and the marketing desire to push the value of a Gigabit-class network, should result in multiple players coming in and adopting aggressive pricing and bandwidth strategies for notebook users. If this happens, and Qualcomm and Microsoft can make the purchasing/activation process of LTE-connected Windows 10 notebooks a straightforward and simple process, it could mean the beginning of an entirely new category of productivity hardware.