Qualcomm, the company that probably made the chip inside the phone in your pocket, has just posted their fiscal Q1 2014 financial results. Note that they actually cover the fourth calendar quarter of 2013. So how did they do? Revenues are up 10% year over year, but net income is down 2%. How is that possible? Easy. A significant amount of the revenue Qualcomm generates comes from licensing their patent portfolio. The amount of money a company pays is usually calculated as being a percentage of the final price of a device. If everyone is buying a cheap phone, that means less money in Qualcomm’s pocket.
Looking at actual MSM shipments, you know them better as Snapdragons, they hit 213 million units, which is up 17% year over year. That’s obviously great news, though even Qualcomm has to admit that the MediaTeks and RockChips of the world are quickly catching up.
What I’m worried about is what happens to Qualcomm when Samsung finally catches up? Rumor has it that by the end of this year, Samsung will have their own equivalent Snapdragon-like system on chip. That means an Exynos fused together with a Samsung-designed LTE-Advanced modem. Considering that Samsung is the largest Android device maker, that doesn’t bode well for Qualcomm’s prospects.
Still, I’m not going to discount the experience that Qualcomm has. Samsung essentially has to start from the very beginning, whereas the highly successful Snapdragon brand has been around since 2008.