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The Perfect Storm for Content

With processing power up and services multiplying, cellphones represent the next frontier for content providers, says Qualcomm CEO Paul Jacobs.

AlwaysOn: Let's start by getting the 30,000-foot view on Qualcomm: What do you see as the company's primary objectives.

Paul Jacobs: We have a strong lineup of technology coming out and a good leadership position, so just executing on that road map will be critical for us. Some of this will focus on higher data rates to and from the phone. However, all of the other functions that are now going into the phone—namely multimedia—represent another key area for us.

We're pushing hard on local TV with MediaFlo technology (which broadcasts multiple channels of live TV to cellphones and other handheld devices). We're pushing hard on gaming with our Brew download platform. We're also putting a lot of effort into developing user interfaces, because the operators needed a framework for launching new services. When no one was offering more than just voice and text messages, it was okay to have one user interface across all operators. Now, however, the operators are trying to differentiate themselves via services, and one user interface no longer fits all. Operators also want to be able to tailor to different demographics—which means that while a kid might want his instant messaging (IM) and games on top, a businessperson is more likely to want his or her calendar and e-mail to be at the highest level.

We try to look at what new services are going to become available and then lower the friction points so that we can get those services into customers' hands as quickly as possible.

AlwaysOn: Speaking of all those services—TV, 3-D gaming, downloadable music and video content, IM, etcetera—which would you put your money on? Which of these services is really going to take off on mobile devices?

Jacobs: I think it will be different for different operators. Verizon, for example, implemented instant messaging using SMS to provide instantaneous back and forth—and this drove a lot of SMS traffic for them. Vodafone, on the other hand, has said that their Mobile TV service is doing really well. And a number of operators are doing really well with downloadable music. So it's exciting to me that there will actually be some differentiation in markets, and that the operators will be able to seek out the services that are most appealing to their customers.

AlwaysOn: How will all of these innovations—and the huge variety of services we can now access on our mobile devices—impact the way people consume information and entertainment? Do you think Hollywood is in for a major disruption?

Jacobs: I think multimedia on cellphones simply represents a new channel for Hollywood and the media companies. I see it as pretty complementary—after all, people will still want to watch stuff on a big screen. The phone isn't going to displace other media. While home theaters are cutting into box office revenues, cellphones are just another channel—an addition to the revenue stream that gives people a lot of latitude in creating content for that platform.

When we talk about how people consume information today, time-shifting is a big part of it: Stuff comes out whenever it comes out, and you get it whenever you want. This kind of thing will absolutely happen on the phone. But there are other things the phone can do that other platforms cannot—namely, it can alert you the instant something's happened. Whether it's news about Qualcomm or information a celebrity has posted to his or her fan website, there's an immediacy to this type of information consumption that didn't previously exist.

There's also going to be a lot more emphasis on getting information across in a relatively short format. I keep hearing that the people who are going to be great at this new format are directors of commercials, because they're used to telling a story in a short period of time. But the other possibility is that people will take long-format content—say 30 or 60 minutes—and just cache it and watch it at their convenience.

There's always going to be value to having content on hand as mindless entertainment—for those occasions when you have time to kill and don't really care what's on. You can either flip through the channels until you find something mildly diverting, or you can watch a clip from a show that you haven't had time to watch yet. I think we're also going to start seeing a mix of live video and either data-casting apps or games, as well as a lot more blurring between what's done locally on the phone and what's actually sent over the air in terms of video and other things.

The really interesting thing on the content side right now is this whole issue of rights: Who has the rights to distribute what content? With the advent of the iPod and video iPod, both content creators and the networks have come to realize that there are many legal issues that need to be cleared up surrounding the various rights for all of these other uses of content. There's a huge effort in the media industry centered on this topic; people are really focused on this.

As a result, this is an almost perfect-storm time for us to bring out our MediaFlo technology, because the content guys are very interested in new opportunities. While they see a threat in some of the things that are happening in their traditional distribution channels, they see opportunity in these new distribution channels.

Take, for example, the gaming companies: The problem with 3-D gaming is that it's been so damn expensive. But if you can create a platform that you can build stuff on top of—kind of like the modding stuff people do with their computers—you can bring down costs considerably. So the question becomes, will game developers take advantage of these channels to start building episodic games, where every week or so you get a new installment of a game? That's got to be a lot less expensive than starting from scratch each time. And if you can get people to sign up on a subscription basis for those installments, you're going to generate a new revenue stream.

We're working with a lot of content creators who are saying, 'I remember when cable TV changed the way content was created.' Now they're asking, 'How can the phone change the way content is created?" There are a lot of people with a lot of different ideas of how this can be done—it will be fun to see how it all shakes out.

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