Qualcomm's Founder On Why the US Doesn't Have Its Own Huawei (wired.com) 89
Wired has interviewed Irwin Jacobs, a founder of Qualcomm. They talk about a wide-range of topics. Here's an excerpt that addresses Chinese tech giant Huawei's growth globally: At first, Qualcomm manufactured its own phone headsets, selling them in Asia. That was around the time it went public in 1991. Eventually, though, it sold off those parts of the business and became strictly an under-the-hood company. This decision wound up having implications in the current competition between the US and China, particularly with the telecom giant Huawei. Because of security concerns, the US is currently doing all it can to stifle adoption of Huawei's products. All of this might be easier if there were an American equivalent to Huawei -- a company working to pioneer the infrastructure of the next generation of wireless that also sold products directly to people. (In this case, that next generation is the much anticipated 5G standard.) Why didn't Qualcomm pursue that?
"We did think about that, but we wanted CDMA to go worldwide," says Jacobs. He says that Qualcomm was still fighting its Holy War, trying to get CDMA accepted everywhere. Being a competitor to carriers would impede that. In 1993, the strategy paid off, when CDMA became the wireless standard. Jacobs says he thought that other US companies, like Motorola, would stay in the business. But one by one, they either shut down or sold out to foreign companies. Qualcomm, by selling companies a comprehensive chipset that could power a cellphone, actually made it easier for new Chinese competitors to hit the market, because they had the tools to create a product instantly. "Unfortunately," he says, "nobody in the US has really run with it" and done the same thing. Another complicating factor is that governments in China and Europe have had industrial aid policies that helped their telecom firms in a way that the US has not. "Our government has not provided R&D support or other support that Huawei and ZTE (another successful Chinese firm) managed to get from their own government," Jacobs says.
"We did think about that, but we wanted CDMA to go worldwide," says Jacobs. He says that Qualcomm was still fighting its Holy War, trying to get CDMA accepted everywhere. Being a competitor to carriers would impede that. In 1993, the strategy paid off, when CDMA became the wireless standard. Jacobs says he thought that other US companies, like Motorola, would stay in the business. But one by one, they either shut down or sold out to foreign companies. Qualcomm, by selling companies a comprehensive chipset that could power a cellphone, actually made it easier for new Chinese competitors to hit the market, because they had the tools to create a product instantly. "Unfortunately," he says, "nobody in the US has really run with it" and done the same thing. Another complicating factor is that governments in China and Europe have had industrial aid policies that helped their telecom firms in a way that the US has not. "Our government has not provided R&D support or other support that Huawei and ZTE (another successful Chinese firm) managed to get from their own government," Jacobs says.
Financialization is the reason (Score:5, Informative)
Re:Financialization is the reason (Score:5, Insightful)
Yep, I call it 'The MBA Disease', they come out of college with shiny new business degrees, no actual experience working anywhere, and six figures of debt and get hired to manage industries of which they have next to no knowledge. They're taught that short term profits are the only goal, and their pay package with its stock options reinforces that concept. The disease is spreading to Europe, Japan and South Korea, but the Chinese business structure isn't likely to let it take root there since banks won't loan to companies that don't have long-term business plans (so I've been told, correct me if I'm mistaken.)
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Maybe you are right, but it is more likely western arrogance that the Americans miss getting Huawei, literally [ft.com], an event revealed last year which the American media have kept silent about.
And the US is try to snatch all prime jewelries from China, like what the American pirates have done ~150 years ago [wikipedia.org],
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Those MBAs have made a lot more money than the likes of you or me.
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Sure, but I'm probably a lot happier than they are.
Re: Financialization is the reason (Score:1)
Re: Financialization is the reason (Score:2)
Why? Money is not correlated to happiness except at the low end of the scale. Someone making $85k is likely just as happy as someone making $3M.
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The myth of shareholder value.
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"Our government has not provided R&D support or other support that Huawei and ZTE (another successful Chinese firm) managed to get from their own government,"
Well now this is kind of the crux of the matter. State run companies, subsidized by the state competing against private companies that are not subsidized.
And of course this means that the ChiCom government has total control of the products and...total access.
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Re: Financialization is the reason (Score:2)
That's hardly cheating. It's smart governance. Canada does the same thing with steel production.
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Qualcomm is the reason why (Score:5, Informative)
And the rest of the patent trolls
They have so many patents in so many areas that doing anything worthwhile in the USA will get hit by a gazillion law suits as soon as it looks like being a hit.
The growth industry in the USA is being a Lawyer and filing a dozen patent lawsuits each and every day.
These are the reason why innovation in the USA has almost stopped.
Come the next revolution... the lawyers will [you fill in the blanks].
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If the FCC had a backbone they'd make it royalty free to manufacturer cell phones and TVs for the US market. How? Use the money from spectrum actions to acquire the patents necessary to implement the standards. I have no problem with reasonably compensating inventors, but extracting $6B/yr in royalties over decades is not reasonable compensation for a couple hundred million in R&D expenditures.
So I would propose a system where you start with people submitting their patented technology including the price for a patent buy out and then conduct multiple rounds where alternative proposals can be used to under bid. Construct a standardization process which results a good standard at the lowest price. I hate how the current system will utilize patented solutions when free solutions (sometimes even better) exist. But that's because the people writing the standards are the ones receiving the royalty checks.
A reverse auction type standardization process would yield the most cost effective standard. So if a Q-type company proposes a patent solution with a $100M buy out and you propose an alternative using free technology and ask $500K for your trouble, then the FCC should give you the $500K and use the free technology. Of course Q-type can come back and under bid at $499K if they choose to. Since this is a public auction you can also submit evidence as to why FCC is making the wrong choice if they try and stick with the $100M option. When the rounds are over -- the FCC buys out the patents using spectrum auction money. Once that happens everyone can make TVs or cell phones without the need to license standards essential patents.
Consider how this would change the competitive landscape in the US TV and cell phone markets. You have to ask -- why does the US have the most expensive cell phones and cell service in the developed world? Something is messed up in the US cell market.
Fine with me, lets keep paying the highest cell phone prices in the developed world.
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Of course now Huawei has all the valuable 5G patents because they did they work too develop it.
Re:Qualcomm is the reason why (Score:5, Interesting)
I think you've got this a bit backwards.
Patent trolls really are a problem, and if you think Qualcomm is one of them, you've never had to try and deal with a real patent troll. I would love if the patent trolls in my industry decided to work more like Qualcomm. Maybe we could get the drug companies to do that as well. A 3% royalty open to any manufacturer sounds great compared to what we deal with now in biotech.
More, you missed the point of the fight between Apple and Qualcomm. The IP that Qualcomm developed has proven to actually be necessary. The whole disagreement between Apple, Qualcomm, and Intel was resolved because Intel couldn't achieve the same quality and performance as the chips made to Qualcomm's designs. Qualcomm's lawyers losing the trial didn't trigger Apple to agree to Qualcomm's terms, it was Qualcomm's engineers who won that fight.
China's IP policy = better innovation (Score:4, Interesting)
Maybe China has hit on something here. At first, everyone in the West railed against China's IP policies - or rather, strategic lack of IP policies. Was is Balmer who said they were going to finally make China pay for Windows? At first everyone just assumed China couldn't compete and had to steal everyone else's IP, but that's not true - at least not any more. Something funny happened. China got cutthroat - all the millions of manufacturing houses there not only rip everyone else off, they rip each other off. And ruthlessly. Something interesting comes out with an interesting and novel way to use generally existing technology and there are 10 copycats tomorrow. So the only way for a Chinese company to truly get ahead is to make technology the others don't have yet. So the ruthless, cutthroat system in China is actually fueling innovation. And patents, which are supposed to drive innovation by securing investment, are just stalling it. The patent system is hopelessly broken because companies make overbroad claims on stuff that either doesn't really work or doesn't even really matter, and as soon as one keyword on one of those overbroad claims matches something in a later patent, boom. It's litigation forever. Patents were supposed to have the additional purpose of encouraging technology disclosure, but patents are now written by experts at disclosing just enough to secure the patent, but be vague enough that you can't actually do anything with what was disclosed. It's useless. And don't get me started on drug patents and the recent spate of companies buying out small-volume drug patents and jacking the prices by 10,000%.
I'm not sure there is a cure for patents, because I'm not sure the good-faith users of the system are even in a majority. It may be time to simply scrap it. We are not getting true disclosure anyway, so if companies "turtle up" behind trade secrets, who cares? Let them innovate by making technology no one can duplicate.
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In the US companies have to much influence on the government.
The companies look to much at short term profit, instead of the government long term goals.
And then we have politicians in the US who take the campaign funding from these companies and also only have the short term goals in sight.
Instead of the politicians representing companies. Maybe they should be forced to wear jackets which look like NASCAR cars with lots of sponsors on them.
That's not how a government is supposed to function. Politicians, ak
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You might want to look at the fashion industry as well to learn about how they deal with patents and copyright:
https://www.youtube.com/watch?... [youtube.com]
Supposedly clothes are to utilitarian for copyright, but we allow Monsanto to have patents on food production ?
Think about that, it makes no sense.
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At first everyone just assumed China couldn't compete and had to steal everyone else's IP, but that's not true - at least not any more.
Except that Huawei wouldn't even be a thing today if not for the leg up they got from industrial espionage. Huawei is a company built on stealing IP. How much of what eventually became the 5G spec was also lifted from other organizations? If history is any indication, the answer is "much of it"
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So, you're telling me that Huawei got all their 5G tech by spying on other companies and then proceeded to do better at it than they could? This is Trump-style nonsense. You know, this is something we all learned from Firefox vs Chrome. Firefox decided to try and emulate Chrome in their technology, release strategy, and even the development culture. You know what? It was a disaster. Because the simple truth is that you can't emulate someone else and be better at it than they are. Copying someone else
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No, I'm suggesting that they may have got SOME of the tech by stealing it, and that history supports such surmise. You're the one who is trying to turn it into "all".
I further am stating that they never would have made it this far without IP theft.
What he left out... (Score:5, Interesting)
There is a reason why the US no longer does this. Because on the net, it doesn't work, except for cutting edge stuff. The US does PLENTY of that with DARPA, and other similar programs.
If you want to see how the Chinese "pick a winner" model would work in the US, you only need to look to the pharma industry. The players just add their sentence and call the book their own. Then they add an new chapter in a few years and say its a new book. Basically the tax payer R&D gets locked up with the private venture/company.
And the telcos get a ton of hand outs from right of ways to contracts to legalized monopolies. Their way may work for a while in China because they have different concepts on intellectual property.
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If you want to see how the Chinese "pick a winner" model would work in the US, you only need to look to the pharma industry. The players just add their sentence and call the book their own. Then they add an new chapter in a few years and say its a new book. Basically the tax payer R&D gets locked up with the private venture/company.
Over 90% of NIH funded research is basic research, less than 10% is directed at finding new drugs. Most of that basic research is unpatented - and unpatentable, and is free for any academic lab (or pharma) to make use of. On the other hand Pharmas spend more on R&D each year than the entire budget of the NIH each year, and that money is pretty much all spent on drug development. Identifying a drug target is definitely an Aha! moment, but it is typically not that far into the process of creating and pro
Short termism? (Score:5, Insightful)
In Chinese thinking, 100 years is "short term".
Even whole ball game teams think about the whole of the current season, not just the next game, but ball players don't have MBAs.
Re:Short termism? (Score:4, Insightful)
Yeah, our MBAs are taught to get theirs, cash out, and move on. American upper management is a culture of legal embezzlement.
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I'd call it a game of 'Executive Musical Chairs', who cares if your actions cause the company to implode in a decade since you'll be off looting some other company by then. The only goal is to not be in the chair when the bills for the malfeasance of prior executives come due.
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Boo hoo government won't help me. (Score:2)
I mean Qualcomm reported only between $3bn and $8bn in net profit every year except 2018. Won't someone think of those poor companies which need government support! How could you possibly pay for R&D while rolling in profit at the same time!
Motorola (Score:5, Insightful)
Re:Motorola (Score:4, Informative)
And on the infrastructure side, Lucent, who mismanaged their way into getting bought by a French company that subsequently got bought by a Finnish company.
Any 5G infrastructure made in America will be jaw-dropping expensive bespoke gear for the military, never sold to carriers.
Re:Motorola (Score:5, Informative)
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And a time when Motorola made the most durable and generally high-quality 2-way radios on the planet, too. You know the saying about how everything is a hammer if you were brave enough? You didn't even have to be brave with those classic Motorola handsets. They were solid like bricks.
I blame the fall on PowerPC. Motorola spent a bunch of money on embedded PPC only to have it absolutely destroyed by ARM. Although really you could blame it on Motorola failing with M88k, which is what led to their involvement
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And a time when Motorola made the most durable and generally high-quality 2-way radios
Story goes those 1960s Motrac trunk units can stop a depleted uranium projectile and the HT200s can chock a runaway railroad car.
Re:Motorola (Score:5, Interesting)
The US did have a Huawei of its own, Motorola
Not to mention that Huawei's owner tried to sell Huawei to Motorola back in 2001 for merely 10 billion, but Motorola just happened to change CEO and the new CEO Zander rejected the deal thinking it was "too expensive". Motorola could have owned Huawei 100%.
It is rumored that Huawei's CEO knew back then that they will be stepping on US's toes in a decade or two if they continue to develop the company, so they tried to just cash out and retire. After the deal got rejected, Huawei's leaders got pissed and decided to forge ahead instead.
That's why Huawei was somewhat prepared for US sanctions (unlike ZTE), and that's why Huawei never went public so it cannot be subverted through the stock market. Check out when the Huawei-owned chip company was started if you do not believe this.
US MBAs only think about the next quarter, while Huawei management think about the next decade or two. A company like Huawei (even if bought by Motorola) will be sucked dry by MBAs in a few years.
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The sad thing is that in the hands of Motorola, Huawei probably would have still been worth less than $10 billion. Acquiring companies usually doesn't work - the new management usually messes up what was working without adding much new value. So Motorola's management was probably right not to buy!
Re: No US Huawei? (Score:3)
wont make any difference (Score:5, Insightful)
Mercantilism and wage surpression ... it works (Score:2)
Surprise surprise, mercantilism works for countries ... even as the people in that country have lower wages in the short term.
End stage capitalism (Score:4, Insightful)
Yeah, this is where we are because the US _didn't_ protect its national interests by preventing mergers that moved all that expertise off shore.
In this industry, it was Bell Labs -- the research and development face of AT&T and American innovation 30 years ago, getting caught up in the telecom deregulation of the mid 90s.
E.g. Bell Labs > Lucent > (purchased by French Alcatel, Purchased by Nokia.
Or Canadian Northern Telecom, getting bought by (Swedish) Ericsson.
Or Bay Networks, or 3com, or US Robotics and any number of companies that innovated here.
E.g. the article is right, there's not a lot of manufacturing or design left in the US.
Nowadays companies like Apple might do the design, but there isn't the expertise, manufacturing or supply chain to make high tech products here.
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Or Canadian Northern Telecom, getting bought by (Swedish) Ericsson.
Also the merged Redback + Siara Systems (subscriber management and routers) getting bought by (Swedish) Ericsson.
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All those companies were zombies anyway. And the reason for that is not lack of government support, but arrogance, intellectual rigidity and lack of strategic vision. They had no real expertise in either IP networks or radio interfaces. The companies that bought them overpaid, because all they were worth was their dwindling market share. Those that did have valuable expertise, Cisco, Qualcomm, among others, are still doing great. The 90s were savage in this area.
USR never did much beyond building modems. Wh
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3Com made other networking hardware, too. It wasn't just NICs, it was switches. As it turned out, they weren't very good at that. But then, they weren't great at NICs, either. Maybe they were just never very good at Ethernet in general. I've had enough problems with 3Com equipment that I suspect this to be the case.
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eh, I'm fairly progressive politically..
Also, you'll find that most countries _do_ protect their domestic markets to the maximum extent they can.
Look at durable goods in Germany. That washing machine may cost 2x what a similar one made in China , but they'll be damned if the wages and expertise are retained in country, rather than somewhere else.
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Nope, Microsoft bough Nokia's phone division. Turned into Microsoft Mobile.
HMD Global is now has the exclusive rights of what was Microsoft Mobile.
Manufacturing is outsourced to Foxconn subsidiary FIH Mobile
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I would say that Apple, in addition to doing design is also a master at managing supply chain (indeed this is one of their biggest strengths). They might not actually do the manufacturing but they do need to do a hell of a lot of organisation to make it all work out.
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Second, what really "broke" Bell Labs wasn't deregulation, it was the breakup of "Ma Bell" by anti-trust regulators.
Third, China cheats! Huawei is basically an arm of the government. We could do the same if we were a totalitarian dictatorship, but I'd prefer not to.
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Slavery phase of development? China is an ancient country. Whom do you think built the Great Wall?
China is an amazingly new country (Score:2)
It was destroyed by Mao, and most of what you see today is only a few decades old.
We live in much the same way as our grandfathers. (OK, so they could afford a house.) But Chinese life today is unimaginably different to what it was under the cultural revolution.
It is truly amazing just how new China is. How much change in so little time. Less than half one lifetime.
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Mao may have destroyed the economy, but he did not destroy cultures and mindsets. China can use mass-incarcerated labor and other forms of virtual slave labor just the same way it did so hundreds upon hundreds of years ago. If the ruling powers say it is so, ultimately, it is so.
China has been in the "slavery phase of development" for a very long time, and it will probably not leave it anytime soon. The only thing that changes is who are the slaves.
Ooh, Ooh, I know! (Score:1)
Trump? Paid for by the Mexicans! Right?
Re: Huawei is subsidized (Score:1)
Huawei has over a billion people working directly or indirectly for them
Yeah, no.
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When they are fully subsidized by the state, yes they do.
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5G like all previous standards didn't come from one company:
https://www.iam-media.com/who-... [iam-media.com]
CDMA, the wireless standard? (Score:2)
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LTE is based on CDMA.
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False. LTE is OFDM with QAM for subcarriers.
https://www.electronics-notes.... [electronics-notes.com]
OFDM was not practical in the heyday of DSSS and CDMA, because it relies on doing large FFTs in hardware in real-time.
You may be thinking of DSSS which is related to CDMA. It was used in 802.11b.
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Canada, Brazil, China, Japan, Korea, Mexico
Just off the top of my head
All those but Verizon, Sprint and US Cellular in the US are shut down.
But for its day in the mid to late 90s, CDMA was demonstrably better than GSM (in terms of packing more calls in a given amount of spectrum. Both technologies have evolved of course .. people say GSM like its a monolithic protocol when its GSM > UMTS > HSPA, and CDMA evolved to use more efficient vocoders, faster data speeds all that.
FWIW on data, the speeds in t
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However the US did itself significant harm in the meantime by having two competing standards.
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My thought exactly. It was pushed as a standard in the US as a protectionist measure and that's all. Typical US strategy to forbid foreign competition by selecting non-interoperable technologies that favor homegrown industries. I would not whine about that if I were Qualcomm...
One more factor (Score:2)
The Qualcomm founder left out one huge point about handset manufacturers in the US. There is one left: Apple. In fact, the presence of Apple is a contributing factor to the absence of other handset competitors. Apple sucks ups so much of the US market that there is reduced incentive to compete. Because the prime motivation for US competition in high tech is stock price appreciation, growth and other ratio metrics are more important than simply having positive cash flow or profits. The dynamics in the
China has an industrial policy, US does not (Score:2)
It is the name. (Score:2)
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All of the good trademarks are taken, especially those with available domain names.
From now on, only massive corporations will have good names for things, and even then only because they bought them.
Who cares about headsets? (Score:2)
The discussion is about the core of the networking gear - the switches, and the software they run. Handsets are relatively unimportant in the big security picture, because they are replaced frequently and have access to limited data only.
If only we had $trillion enties that could help (Score:2)
In other words, socialism (Score:3)
"Our government has not provided R&D support or other support
Won't someone think of the corporations! They only make a few billion dollars each year. How are they supposed to pay for R&D when their executives need $30 million salary and bonuses just to survive.
It's almost as if leeching off the taxpayers has become a way of life. Forget capitalism and competition, how many more trillions can we siphon off while buying back our own stock?