2. 2005 was another year of
growth in our global markets
and in our financial performance
revenue and gross margin research and development diluted net income (loss)
(1) (5)
per share (2) (5)
$ in billions $ in billions
$1.01 $1.26
$5.67
$4.88
$1.03
$0.72
71%
$3.85
70%
$0.52
$2.92
$2.68 67% $0.45
$0.42 $0.51
67%
61%
18% $0.22
15%
14%
15%
15%
($0.38)
03 03
02 04 02 04
05
01 05
03
02 04 05
01
gross margin r&d
revenue % of revenue
01
pro forma diluted net cash, cash equivalents and free cash flow *
(1) (3) (4)
income per share * marketable securities
(2) (3)
$ in billions
$ in billions
$2.15 $2.11
$1.16 $8.68
$1.07
$7.64
$1.62
$5.37
$0.71
$1.14
$0.94
$0.48
$0.43 $3.20
$2.58
03
01 03
02 04 05 02 04
03 01
04 05
02 05
01
(1) (2) (3) (4) (5) See notes on page 74.
* See reconciliation to GAAP amounts on page 76.
3. on
executing
our road maps
we are
focused
01 letter to stockholders 06 execution 16 innovation 22 partnerships 29 people
4. in cooperation with our
partners
and
innovating
new wireless technologies,
products and services
32 financials
31 awards and honors
5. To Our Stockholders,
For QUALCOMM, 2005 was a year of records and the achieve-
ment of new milestones. Once again, we posted record financial
results, further increasing our revenues, earnings and operating
cash flow. We delivered new products, opened new markets and
led the industry with innovations designed to cost-effectively
deliver the promises of next-generation wireless.
We announced the shipment of our two billionth chip. Seven new customers selected
> qualcomm continues to
our WCDMA (UMTS) chipsets for their WCDMA phone products, bringing the total
drive stockholder value
number of WCDMA customers to 32. In June 2005, BREW® publishers and developers
as we develop innovative
products and technologies reported that they had earned more than $350 million from the sale of wireless
for our many customers in applications and services developed for operators’ BREW-based services. And we
the wireless industry. recently announced Verizon as MediaFLO’s first U.S. operator.
We continued to invest in emerging technologies through strategic acquisitions and
research and development (R&D). We completed four acquisitions this year, expand-
ing our talents with an exciting new display technology, new user interface
comparison of cumulative total return on investment
since september 30, 1999
% change, qualcomm versus major indices
400%
350
300
250
200
150
100
50
0
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11/30/99
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05/31/05
07/31/05
09/30/05
QCOM SPX DOW NASDAQ
6. company in Europe and engineering resources in India. We
announced our intent to acquire Flarion Technologies, a
developer of OFDM-based mobile wireless data products.
Our MediaFLO™ division conducted the first live, over-the-
air demonstration of FLO™ technology. And we smoothly
transitioned the management of the Company to a new
leadership team.
a catalyst for industry progress
> we have become successful by
QUALCOMM pioneered the commercial development of Code
aligning our business model with
Division Multiple Access (CDMA) wireless technology. Because
others in the wireless industry
of its advantages in providing unmatched voice and data capac-
value chain, including equipment
ity and advanced capabilities for wireless networks, today
manufacturers, network opera-
CDMA serves as a foundation for enabling Third Generation
tors, application developers and
(3G) services worldwide. Since our founding in 1985, our main
content providers.
business has been to develop, design, license, manufacture
and market digital wireless telecommunications products
and services based on CDMA. Looking forward, we are lever-
aging this wireless expertise as we design systems using an
increasing array of technologies, positioning the Company
well to continue driving new applications for wireless.
We have become successful by aligning our business model
with others in the wireless industry value chain, including
equipment manufacturers, network operators, application
developers and content providers. By providing a vision for
what’s possible and consistently delivering on our technology
and chipset road maps, we have built a reputation that our
partners can depend on. In addition to the traditional wireless
suppliers, our business model has enabled new companies
to enter the wireless market, creating increased competition,
a faster pace of innovation and a rapid decrease in device
costs, to the benefit of wireless operators and consumers.
leading in innovation
We have increased our R&D investment year-over-year to
capitalize on the opportunities afforded by the accelerating
transition to 3G and the increasing industry focus on the use
of wireless devices for entertainment, productivity and com-
puting, in addition to traditional voice communications.
qualcomm 2005
02
7. Data usage is contributing new and valuable revenue streams multiple frequencies (or “multicarrier”). MediaFLO is a good
to operators, and this trend is increasing the demand for example of DMMX, because audio and video transmissions
even higher data rates. We continue to evolve our technology over cellular networks (using EV-DO or HSDPA) can be seam-
to enable increased speeds and functionality for advanced lessly combined with transmissions received using the FLO™
3G systems. EV-DO, the high-speed data evolution of technology operating in separate spectrum. The goal is to
CDMA2000® is already widely available, and more than 120
, enable our operator partners to provide a superior multimedia
EV-DO device models are now being sold in South Korea, experience at the lowest possible cost.
Japan and the Americas.
On the WCDMA side of 3G, we are leading the development
We recently announced DMMX™ (DO Multicarrier Multilink of HMMX™ (HSDPA Multicarrier Multilink eXtensions). We
eXtensions), our platform for driving the EV-DO road map continue to provide our WCDMA customers and partners
through the end of the decade. Part of our DMMX strategy with products that support higher data rates through our
is to be both the leading supporter of the standards-based High-Speed Downlink Packet Access (HSDPA) and High-
enhancements to EV-DO technology (Revision A and Revision Speed Uplink Packet Access (HSUPA) solutions. Through
B), and the leader in implementing other enhancements that these solutions, they in turn can provide their customers
significantly improve system performance but don’t require with enhanced multimedia and IP-based data capabilities
changes to standards. including multicasting.
These developments will open the door to mobile voice over Additionally, we continue to focus on Orthogonal Frequency
Internet protocol (VoIP) services and very low-latency applica- Division Multiplexing (OFDM) technologies for mobile broad-
tions such as push-to-talk. With DMMX, phones will operate in a band Internet protocol-based (IP) services. Our internal
concurrent “multilink” manner with multiple radio technologies development efforts in OFDM and MIMO (multiple input,
(or links) while simultaneously receiving and transmitting at multiple output) technologies led to DO Platinum Multicast,
annual dividend history
per share
> the growing adoption of cdma-based
$0.32
3g technology across many customer
segments and regions around the
world continues to drive strong
financial results for qualcomm.
$0.19
$0.08
Note: The Company effected a two-for-one stock
split in August 2004. All references to per share
data have been adjusted to reflect the split.
FY03 FY04 FY05
qualcomm 2005 03
8. executive committee
Top row: Dr. Paul Jacobs, Steve Altman, Dr. Sanjay Jha, Bill Keitel, Dr. Roberto Padovani. Bottom row: Dr. Dan Sullivan, Lou Lupin, Jeff Jacobs, Peggy Johnson, Marv Blecker.
which is part of the EV-DO standard, and FLO, our dedicated million in cash dividends in fiscal year 2005 and repurchased
multicasting air interface technology which is part of the 27.1 million shares of common stock for $953 million.
MediaFLO System. QUALCOMM’s total cash and marketable securities balance
at fiscal year end grew to $8.7 billion.
driving shareholder value
The growing adoption of CDMA technology-based 3G stan- To meet the large market opportunity that lies before us, we
dards across many customer segments and regions around continued to invest in R&D, hire more engineers and expand
the world continues to drive strong financial results for our global workforce. We increased our selling, general and
QUALCOMM. We are very pleased with the demand for our administrative (SG&A) expenses to meet the needs of our
CDMA2000 and WCDMA chipset solutions from manufacturers growing customer base. However, as a percent of revenue,
throughout the world. QUALCOMM earned revenues of $5.67 SG&A expense remains modest and we continue to execute
billion in fiscal year 2005, up 16% from fiscal 2004. Operating on our asset-light business model. Through these measures,
cash flow, defined as net cash provided by operating activities, we expect QUALCOMM will sustain its leadership position
was $2.69 billion, up 8% year-over-year, and represented in innovative wireless technologies and continue to grow
47% of revenue. And fiscal 2005 diluted earnings per share stockholder value.
were $1.26, compared to $1.03 in 2004.
celebrating our heritage
We continued to focus on returning capital to QUALCOMM In the summer of 2005, QUALCOMM celebrated two decades
stockholders through another increase in our quarterly cash of growth and accomplishment. As part of that event, we
dividend and a further increase in our stock repurchase announced changes in our leadership. It was an inflection
authority to $2.5 billion. Our commitment to returning value point in the evolution of our company. Dr. Irwin Jacobs stepped
to stockholders is evidenced by the fact that we paid $524 down from his position as chief executive officer, but continues
qualcomm 2005
04
9. “I am very proud of QUALCOMM’s accomplishments achieved with the exceptional team we have
attracted since forming the Company, and I am especially excited by what is yet to come.”
Dr. Irwin Jacobs
will be less about competing technologies and more about
to serve as chairman of the board of directors. The transition
complementary technologies working together in a seam-
had been carefully organized as part of a succession plan
less and concurrent fashion.
developed by the governance committee of our board of
directors. As part of the transition, Tony Thornley announced
Whether measured internally through our staff, or externally
his retirement as president. Tony contributed greatly to
through our many industry partners, the main measure of
the success of our company and we wish him all the best in
our success ultimately depends on how well we enable others
his retirement.
to succeed. To accomplish that, we will remain focused on
executing on our road maps and innovating new technologies,
focused on the future
products and services in cooperation with our partners
As we look to the next chapter in QUALCOMM’s development,
throughout the wireless industry.
we can proceed with the confidence that our executive team
and board of directors have not lost sight of the principles
that have guided us thus far. We will maintain our high stan-
dards for accounting controls and corporate transparency
Dr. Paul E. Jacobs
that have characterized our company since its founding. And
we will continue to build on the fundamental QUALCOMM Chief Executive Officer
values of innovation and integrity.
In the future, we see a world of increasingly robust and diverse
Steven R. Altman
wireless networks, all operating in conjunction, and supporting
President
a wide variety of rich services, accessible by subscribers on
their wireless devices. We believe the next evolution in wireless
qualcomm 2005 05
10. 2g 3g >
voice voice and data voice and convergence
high-speed data
CDMA2000® 1X
cdmaOne® WCDMA CDMA2000 1xEV-DO HSDPA EV-DO Rev. A and Rev. B
VoIP
MediaFLO
HSUPA
DMMX and HMMX
executing
on our road maps
qualcomm 2005
06
11. delivering
on our
promises
QUALCOMM continues to deliver new products, open new markets
and lead the industry with exciting and innovative wireless solutions.
Committed to serving from the low end to the high end of the
market, we are enabling the next generation of wireless progress
with the right solutions at the right cost.
qualcomm 2005 07
12. execution
> with a history of
vision and leadership
Since its founding in San Diego, The QUALCOMM team understood that
California in 1985, QUALCOMM has CDMA represented a better way of
been at the heart of the digital wire- delivering wireless services. It provided
less communications revolution. A a higher-quality user experience and
company of engineers, scientists was more efficient than existing wire-
and business professionals, today less technologies, promising significant
QUALCOMM has become a major inter- competitive and economic benefits for
national organization, distinguished by operators with the foresight to adopt
its entrepreneurial spirit and a track the technology. Indeed this solution
record of delivering on its promises. represented a significant opportunity
for all involved: manufacturers, network
operators and consumers.
taking the risk to deliver
on a vision
In the business world, not every idea It took many years of development,
is accepted into the market quickly. testing and field trials before CDMA
Such was the case when Company became widely accepted. It was a new
founder Dr. Irwin Jacobs and a small concept after all, and at that time
group of like-minded people set out QUALCOMM was a relatively unknown
to commercialize a different kind of company. Not to be deterred, the
wireless technology called CDMA. QUALCOMM team held true to its
vision and committed its resources
to innovating the new technology.
>
20 years 1985: 1988: 1989: 1993:
A New Company First Product Launch A Big Idea Setting a New Standard
of driving
industry
The OmniTRACS® system
QUALCOMM is QUALCOMM proposes CDMA is adopted as a
progress
founded. greatly improves CDMA as a more efficient, North American digital
communications for higher-quality wireless cellular standard.
truck fleets. technology.
08 qualcomm 2005
13. > qualcomm has consistently
finding the best solutions for today’s
working to ensure the best
rapidly changing wireless industry.
possible solutions had the vision to look beyond
QUALCOMM works on many fronts to the immediate horizon… to
advance the wireless industry. To The goal of all these global develop- anticipate and plan the future
complement its ongoing internal ment efforts is to grow and help drive of wireless.
research and development efforts, the market—to accelerate the adoption
QUALCOMM also invests in other and evolution of the world’s leading 3G
companies engaged in wireless inno- standards. This cycle of collaborating
vation. Whether through internal or with others to build a market and then
external development, QUALCOMM sharing in its success goes to the heart
is unwavering in its commitment to of QUALCOMM’s business model.
1997: 1999: 2000: 2001:
Rapid Growth The 3G Standard Market Milestone Broadband Speeds
CDMA becomes the fastest CDMA2000 1X and WCDMA are QUALCOMM ships its CDMA2000 1xEV-DO is
growing technology in wireless selected as standards for 3G 100 millionth CDMA chipset. recognized as a 3G standard
communications. wireless by the International by the ITU.
Telecommunications Union (ITU).
qualcomm 2005 09
14. execution
> with the industry’s
broadest product offering
QUALCOMM contributes to the wireless powerful choices meeting market needs
industry at many levels, from the QUALCOMM CDMA Technologies QUALCOMM’s Mobile Station Modem™
standards process to product develop- (QCT) creates state-of-the-art 3G (MSM™) chipsets range across four
ment and testing, deployment and chipsets, systems software and full-featured platforms to serve the
optimization. This is made possible by development tools. These technology needs of many different market seg-
investment in R&D and through the solutions enable many of the world’s ments—and many links in the wireless
dedicated efforts of our world-class, most advanced 3G handsets and industry value chain, from device manu-
global workforce. wireless devices, providing users facturers and network operators to
with powerful features. Among application developers and content
The Company values collaboration the capabilities of these chipsets providers. These products include
with its customers and partners in the are multimedia, position location, entry-level chipsets that provide new
wireless industry and works closely security, connectivity (including Blue- users with voice and basic data ser-
with them to enable their success. This tooth® USB, etc.) and content-rich
, vices, to solutions with the processing
has been the guiding strategy behind applications based on the BREW power to support advanced wireless
QUALCOMM’s semiconductor business system and Java®-based technologies. applications.
since operations began in 1995. Over
the following decade, this division
shipped more than two billion inte-
grated circuits to the wireless market.
2001: 2003:
2002:
Wireless Internet Market Validation
New Markets Global Roaming
Verizon Wireless begins
QUALCOMM ships its QUALCOMM ships its first
QUALCOMM’s BREW
system opens up a world EV-DO deployment and China
first chipset supporting chipset enabling use of
of downloadable wireless Unicom launches a nation-
WCDMA networks. CDMA and GSM networks
applications. wide CDMA2000 network.
during travel.
10 qualcomm 2005
15. qualcomm is a full-service partner
supporting many tiers of the market
Convergence Platform
With dual processors reaching the 1 GHz benchmark on a single chipset, chipsets in this platform open
the door for a whole new generation of wireless capabilities. Convergence Platform solutions provide the
processing power required for mobile handsets to incorporate consumer electronics and computing
features in demand by sophisticated wireless users.
Enhanced Multimedia Platform
Chipsets in this platform significantly increase the graphics, camera and video playback capabilities of
the Multimedia Platform. Designed to deliver high performance with lower power consumption, these
fully integrated solutions are optimized to drive demand for data-intensive wireless multimedia.
Multimedia Platform
The Multimedia Platform of chipsets enables manufacturers and operators to deliver wireless multimedia
with up to 3.0 megapixel camera resolution for album-quality snapshots, easy-to-play portable MP3 songs
and more. This product line is designed to accelerate mainstream adoption of wireless multimedia in 3G.
Value Platform
Chipsets in the Value Platform enable voice and basic data phones and services for emerging markets
such as India, China, Latin America and Southeast Asia. This platform introduces the power of 3G to a
vast audience, including those who may be new to wireless.
2005: Outpacing
New Customers Expectations A Celebration
A Market Milestone
India’s first CDMA2000 As demand surges, cumula- QUALCOMM celebrates
Cumulative shipments
nationwide network launches, tive shipments of QUALCOMM two decades of progress,
of QUALCOMM chips
bringing advanced wireless chips surpass the two while looking ahead to
surpass the one billion mark.
data and voice services to billion mark. many more years of driving
92 cities. wireless forward.
a story of rapid growth
(cdma subscribers worldwide)
1996: 2001: 2005:
1mi 100mi 300mi
llion llion llion
Source: www.cdg.org
qualcomm 2005 11
16. execution
> enabling the world’s most advanced
wireless networks
> 3GPP2 and 3GPP standards-based
With its multimode, data-enabled
wireless solutions
enhancements to EV-DO and HSDPA.
WCDMA chipsets, QUALCOMM contin-
and support
> QUALCOMM-developed techniques
ues to enhance wireless products
QUALCOMM’s global development
for improving capacity and speed that
that accelerate the growth of WCDMA
teams are working with wireless net-
do not require changes to current or
while making the most of operators’
work operators around the world to
proposed standards.
existing network investments.
help them deploy, optimize and upgrade
> Chips and software enabling the con-
their networks to take advantage of 3G
current operation of multiple radio links
Commercially launched in late 2005,
capabilities. In addition to offering chip-
such as CDMA, TDM and OFDM–all work-
HSDPA is an evolution of existing
sets and system software, QUALCOMM
ing in a backward-compatible manner.
WCDMA networks that provides a
works with operators on defining fea-
powerful boost in data rates and an
ture sets that help differentiate their
> dmmx and hmmx represent
increase in overall network capacity
services. As part of this collaboration,
analogous to what EV-DO provided to
the Company also provides network qualcomm’s road map for
CDMA2000. It allows wireless users
and interoperability testing. innovation, supporting our
to receive high-quality video and customers and partners
audio, quickly browse graphics-heavy through the year mmx–or
multiple migration paths
2010–and beyond.
websites, and run other advanced appli-
Demand for high-speed wireless appli-
cations on their mobile handsets.
cations and services is growing rapidly,
The DMMX and HMMX platforms will
and QUALCOMM offers existing and
not only significantly improve the
future product road maps for making dmmx and hmmx
performance of 3G CDMA technology,
In the fall, QUALCOMM announced
economic and efficient wireless net-
they will also enable operators to deploy
its DMMX (DO Multicarrier Multilink
work and service transitions.
networks and devices that combine
eXtensions) and HMMX (HSDPA
different technologies optimized for
Multicarrier Multilink eXtensions)
For CDMA2000 operators around
specific services, all used concurrently
platforms to support the long-term
the world, EV-DO is the high-speed
in a manner transparent to consumers.
road maps of EV-DO and HSDPA.
data evolution of choice. It offers a
The Company’s DMMX and HMMX
cost-effective wide-area wireless
platforms are a set of technology
broadband solution with data speeds
and product innovations based on
that enable the efficient delivery
three fundamental pillars:
of new Internet protocol-based
mobile capabilities.
For GSM operators migrating to 3G
CDMA, QUALCOMM developed the
world’s first commercially available,
fully integrated WCDMA (UMTS)*
chipset solution.
* WCDMA is referred to in Europe as Universal Mobile Telephone Service (UMTS)
12 qualcomm 2005
17. delivering the next generation of
applications and services
The BREW solution is network- and > marketOne, a hosted, scalable content
taking wireless to the
technology-agnostic, and serves service, including a broad array of
next level
QUALCOMM Internet Services (QIS) everyone in the wireless value chain media titles, targeted at those opera-
is focused on the next generation of with an array of technologies and tors either desiring a quick to market
wireless applications and services that services. BREW now includes: solution and/or looking to reduce capi-
will combine data and voice capabili- tal and operating expenses. marketOne
ties to better suit consumer needs in a > uiOne™ which enables rich, integrated
, provides customers the ability to create
converged wireless Internet world. QIS and dynamic user experiences on wire- promotional strategies for content
is responsible for several products that less devices. uiOne features an open, without the operational burden or
enable useful wireless experiences for extensible client software platform and service deployment and relationship
consumers around the world, including the uiOne software development kit, management.
the BREW solution, QChat™ push-to-talk as well as shopping applications and
technology, the QPoint™ location server screen templates, to provide a simple-
solution and Eudora® email products. to-use powerful wireless data offering.
> deliveryOne™ a solution focused on the
,
delivery of advanced wireless data
a flexible offering for
content and custom user interfaces to
making mobile data useful
an array of wireless devices. deliveryOne
and profitable
QUALCOMM’s BREW solution was is an in-network deployed offering
conceived to meet the need for an open that provides customers unified
and uniform applications and services content delivery.
platform for wireless devices, and to
help accelerate wireless data worldwide.
an innovative new unified content delivery system
deliveryOne suite It combines QUALCOMM’s BREW solution The acquisition of U.K.-based Trigenix
QUALCOMM’s acquisition of United and QSenses media content delivery this year enabled QUALCOMM to provide
Kingdom-based ELATA this year enables system, allowing operators to consolidate uiOne, a solution tailored to wirelessly
wireless network operators in Europe all content services for all device platforms deliver themes and personalized user
and elsewhere to manage their data under a single service delivery system. experiences with dynamic content,
services without interrupting or adding designed for rapid, low-cost integration
any additional infrastructure to their deliveryOne is a solution tailored to work in into an operator’s service offering.
existing system. conjunction with any device type to provide
content services with added business and
security features for operators.
qualcomm 2005 13
18. execution
> making wireless
work for business
> 3g benefits business
productivity and effectiveness.
enabling business without
And enterprises benefit from conve-
boundaries customers by driving down
The need for mobile connectivity is nience, cost savings and optimized their costs and increasing
growing dramatically. Solutions are performance. productivity. it also helps
being delivered on a wide variety of enable customer service
platforms, and workers want access to For WCDMA networks, notebook cards improvements and can create
the same kinds of capabilities that are powered by QUALCOMM chipsets are new revenue opportunities.
available in the office, such as access now available in the marketplace that
to email with large attachments and to take advantage of the high-speed data
Internet services. The availability of capabilities of HSDPA. Several laptop
advanced 3G networks satisfies this manufacturers have also announced
desire by enabling notebook computer plans to produce laptops with embed-
users to enjoy wireless broadband ded HSDPA connectivity.
connectivity anywhere they can make
a wireless phone call. QUALCOMM continues to leverage its
expertise in wireless solutions to help
Several industries came together this enterprise customers transform the
year to offer notebook computers way they do business. QUALCOMM
integrated with EV-DO technology, Wireless Business Solutions (QWBS)
making wide-area wireless broadband delivers high-reliability workflow-based
service even easier to use. business solutions for target vertical
markets, with behind-the-firewall
Notebooks embedded with high-speed enterprise system integration.
data connectivity improve employee
14 qualcomm 2005
19. Among the many other business-to-
The roots of this success began with Because of QUALCOMM’s long-standing
business solutions gaining market
the Company’s first commercial history of working with governments,
traction are the T2™ Untethered Trailer-
product in 1988, the OmniTRACS® QGOV was in a unique position to create
TRACS® asset management solution
mobile communications solution. The timely industry solutions that played a
and a growing suite of application
OmniTRACS system has revolutionized valuable role in helping early responders
service provider web services.
transportation and logistics in the U.S. deal with the aftermath of Hurricane
and in other major markets worldwide, Katrina this year.
and is now in service with more than leveraging commercial
6,000 businesses in 39 countries. In cooperation with our industry part-
wireless for government
QUALCOMM Government Technologies ners in the region, including Alltel,
(QGOV) leverages QUALCOMM’s core
The OmniTRACS system continues Globalstar, Sprint Nextel, and Verizon
competencies and technologies
to evolve to meet the transportation Wireless, we were proud to work to-
to deliver wireless solutions to gov-
industry’s changing needs. The next gether with the Federal Emergency
ernment users, enabling them to
generation of the solution, the Management Agency and the U.S.
accomplish their missions in a secure
OmniVision™ mobile computing plat- military. Together, we provided deploy-
manner with commercially available
form, will leverage 3G technology and able base station systems, Globalstar
devices. QGOV is also dedicated to
incorporate innovations, including Satellite phones, OmniTRACS® vehicle
high-speed satellite links, over-the-air tracking devices and other support
adapting and modifying its commercial
software deployment and a text-to- services that enabled rescue and
products to provide specialized capabili-
speech user interface. restoration teams to communicate.
ties for the government that enable
interoperable communications anywhere
and anytime. In addition, it leverages
QWBS continues to introduce new
advances in commercial wireless tech-
offerings for the transportation and
nology for government needs. A prime
logistics market while expanding into
example is QUALCOMM’s development
new areas. A recent example was the
of a secure wireless device certified
successful launch of the GlobalTRACS®
for top-secret communications, which
equipment management solution for
enables total end-to-end security for
the construction equipment sector.
government agencies.
qualcomm 2005 15
20. technology performance
leadership leadership
data
leadership
low-cost
initiatives
tiered
solutions
innovating
new capabilities
16 qualcomm 2005
21. QUALCOMM uses its automated anechoic chamber facilities to evaluate over-the-air performance of
next-generation wireless portable devices, to support integration and test activities of prototype hardware
developed by OEMs and licensees and to investigate novel antenna design concepts for new wireless devices.
envisioning
what lies
ahead
Fueled by scientific curiosity and inspired by professional collaboration,
QUALCOMM and its partners at all levels of the wireless world are
driving the industry forward by bringing ever-newer services and
features to market.
While successfully innovating new technologies, products and services,
we are also working to reduce time to market and to drive down costs
for our industry partners and for the consumers and enterprises who
rely on wireless connectivity in their daily lives.
qualcomm 2005 17
22. innovation
> dedicated to
advancing wireless communications
industry, fostering competition and
an unwavering commitment to
spawning innovation.
research and development
QUALCOMM’s strong and ongoing
investment in research and development QUALCOMM Technology Licensing (QTL)
has been a cornerstone for the Company’s grants licenses to use the Company’s
strategy from the very beginning. It has intellectual property portfolio, which
grown and prospered by developing and includes certain patent rights essential
applying advanced technologies for to (or useful in) the manufacturing, sale
wireless telecommunications products and/or use of CDMA-based products.
and services. And through internal QTL has licensed more than 130 wire-
growth, investment, widespread less equipment manufacturers, over 60
licensing, strategic partnerships and of which include WCDMA. CDMA tech-
acquisition, QUALCOMM remains nology is synonymous with QUALCOMM
committed to being the leader in the innovation and is the basis for 3G
development of wireless technology networks around the world.
far into the future.
Our patent portfolio is the most widely
and extensively licensed portfolio in
an industry-enabling
the industry. Achieved through bilat-
patent portfolio
The Company’s strong intellectual eral, arm’s length negotiations and the
property position provides revenue to operation of free market forces, the
fund significant innovation, technology large number of QUALCOMM license
development and future growth. Our agreements have established the value
portfolio helps to solidify QUALCOMM’s of QUALCOMM’s patent portfolio for
role as a leading contributor in the 3G standards.
ongoing success of the wireless
operator choices help fuel market competition
QUALCOMM’s strong investment in R&D Thanks in part to QUALCOMM’s leadership,
has led to more than 4,000 U.S. patents today’s wireless industry is robust and
and patent applications and more than growing with 3G devices readily available
27,000 foreign filings. The Company’s broad from a broad base of manufacturers. Over
licensing strategy has been a catalyst for the past decade, QUALCOMM licensees
industry growth, helping to create new have commercialized more than 1,000
competition while driving down average phone models spanning many price points,
selling prices for 3G handsets and providing operators with flexibility to meet
wireless devices. customer demands.
18 qualcomm 2005
23. helping to enable a growing $150+ billion industry
One reason behind the rapid global
growth of 3G has been QUALCOMM’s revenues, in billions
cdma/wcdma subscribers, in millions
inclusive approach to doing business.
By licensing a wide range of equipment
manufacturers, encouraging innovative
894 M
applications, supporting equipment
manufacturers with a total solution, and
$475
focusing on making the airlink more
efficient for operators, the Company
has helped 3G CDMA evolve and grow at
a faster pace than the second-genera-
tion technologies that preceded it.
a broad-based expertise
Through this collaborative approach,
QUALCOMM has helped drive wireless
industry standards. The Company has
consistently developed solutions that
are backwards compatible, making it
easier and less costly for operators
to migrate and upgrade their legacy
networks to 3G, while ensuring fast Estimated Industry Total
254 M
Industry — CDMA/WCDMA
time to market for device designers
Infrastructure Revenues
and manufacturers. 189 M
Industry — CDMA/WCDMA
$155 B Handset Revenues
145 M
17.8 B
Industry — CDMA/WCDMA
Platform- and technology-agnostic in Service Revenues
35.8 B
$114.4 B
their approach to problem-solving, the CDMA (CDMA2000 and WCDMA)
14.5 B Subscribers
engineers at QUALCOMM are augment- $93.1 B 101.4 B
22.3 B
13.0 B
ing the Company’s core competencies 17.0 B 77.5 B
in CDMA with a growing expertise in 63.1 B
complementary wireless technologies,
including OFDM.
03
02 04 09
estimated
Sources: Infrastructure Revenue, Average of Gartner Group (09/04) and Strategy Analytics (12/05)
Service Revenue, Strategy Analytics (08/05)
Handset Revenue Strategy Analytics (06/05)
CDMA/WCDMA Subscribers EMC (11/05)
qualcomm 2005 19
24. innovation
> we continue to
focus on performance leadership
for 3g wireless
cost-effective prices. This is desirable become commercially available less
integrated solutions to
because it produces higher revenue than 12 months later. Additional
drive down costs
QUALCOMM is continuously focused per user and increases profitability HSDPA handsets and devices are
on lowering the costs and increasing the across the wireless value chain. To that expected throughout 2006 as the
effectiveness of wireless technology. end, QUALCOMM continues to innovate Company samples new solutions for
With the most advanced and highly with new solutions aimed at increasing high-speed uplink packet access
integrated 3G CDMA chipset solutions wireless capacity and speed. (HSUPA), which delivers support for
(semiconductors and system software) low-latency applications.
in the world today, the Company helps The New Receive Diversity Solution
manufacturers achieve savings by This year QUALCOMM announced the The Fourth-Generation Vocoder™
reducing their bill of materials costs industry’s first single-chip receive (4GV™) Solution
and enabling faster time to market. diversity solution. It uses an additional To enhance EV-DO Rev. A, QUALCOMM
Consumers enjoy the benefits of having antenna and associated receive chain designed the 4GV codec. Wireless oper-
smaller, lighter devices with more ad- to support improved signal reception, ators can double their network capacity
vanced features and longer battery life. enabling higher data throughput and sig- by deploying 4GV in conjunction with
nificant increases in network capacity. receive diversity technology. The Quality
A New Single Chip Architecture of Service (QoS) feature enriches the
This year, QUALCOMM announced the The Next Evolution in High-Speed Data user experience for delay-sensitive appli-
world’s only single-chip CDMA2000 EV-DO solutions have enabled wireless cations, including IP-based services
solution. By integrating multimedia, users to experience advanced data like VoIP and other real-time applica-
baseband, radio transceiver and power applications and Internet access at tions such as push-to-talk, video
management into a single package, broadband speeds. The next evolution telephony and multi-player gaming
the QUALCOMM Single Chip™ (QSC™) of CDMA2000, EV-DO Revision A, is services that combine immediate voice
family of products helps drive down planned for launch in 2006. Along with with simultaneous delivery of video
handset costs. major capacity improvements, it sup- or pictures.
ports significantly faster data rates.
A New Transceiver Solution QUALCOMM was first to market with a new division focused on
The first RF CMOS-based transceiver commercial solutions for the new tech- next-generation display
for CDMA2000 was introduced this nology and offers complete solutions technology
year. Integrated into QUALCOMM’s for EV-DO Rev. A. The new QUALCOMM MEMS Tech-
single-chip solution, it overcomes the nologies (QMT) division is focused on
interference sometimes experienced QUALCOMM has also emerged as an rapidly increasing the capability of
from placing the receive and transmit industry leader in high-speed downlink display screens, while driving down
functions on the same device. packet access (HSDPA) technology, cost and power consumption.
the next feature of the WCDMA (UMTS)
standard that enables new services QMT is developing iMoD™ displays—a
increasing voice capacity
requiring higher data speeds and next-generation display technology
and data speed
To meet growing demand for rich greater network capacity. The Company for a full range of mobile products.
multimedia, operators want to sampled the world’s first HSDPA solu- This potentially industry-transforming
deliver wireless high-speed data at tion in early 2005 and saw devices display technology combines thin film
20 qualcomm 2005
25. while innovating and supporting
new technology breakthroughs
> IP datacasting, such as stock price
optics with micro technologies to
information
create an always-on display that is a new qualcomm subsidiary
easily viewable in virtually any environ-
FLO Technology, one of QUALCOMM’s
ment. This will enable new applications
MediaFLO™ USA, Inc. is deploying and
multicast innovations, is a new air inter-
and open new market opportunities. will operate a nationwide U.S. wireless
face technology. It has advantages over multicast network, delivering a diverse
other mobile multicast technologies, content lineup of streaming and
a revolutionary new
Clipcast™ video and audio channels.
such as:
multimedia system
The Company will provide wholesale
The MediaFLO System is comprised
multimedia delivery services to U.S.
> Faster channel switching time
of two components: FLO Technology wireless operators, with plans to launch
> Superior mobile reception
and the MediaFLO Media Distribution commercial operation of the new
network in the fourth quarter of 2006.
> Greater air-link efficiency
System (MDS). Together they deliver
> Optimized power consumption
an efficient over-the-air multimedia
For wireless network operators,
solution that enables wireless
MediaFLO USA will aggregate and
The MediaFLO Media Distribution
operators to cost-effectively deliver distribute shared content. Wireless
System is an end-to-end solution from
high-quality audio and video content operators will have the option to
integrate, via MediaFLO, unique
QUALCOMM that enables efficient
to their subscribers. This system
content they may acquire.
delivery of secure, high-quality net-
enables multicasting of:
work-scheduled multimedia content
For content providers, MediaFLO USA
over wireless networks to millions of
> Up to 20 high-quality QVGA (320x240 represents a new distribution channel.
subscriber handsets. The MDS coordi-
pixels) video channels at up to 30 It is a dedicated network, built to deliver
large amounts of high-quality content
nates the distribution of content and
frames per second
to large numbers of users at the
the updating of the Media Program
> Up to 10 stereo audio channels
lowest cost.
Guide, which subscribers use to access
(HE AAC+ parametric stereo)
the content. The MDS is versatile
> Up to 800 minutes of Clipcast™ Verizon Wireless is the first U.S. wireless
enough to be deployed over any IP
(short format) media per day service provider signed on to offer
MediaFLO once the network becomes
packet data network.
commercially available. QUALCOMM
and Verizon Wireless expect to launch
mobile TV services over the MediaFLO
a one-to-many service and data delivery platform
network in approximately half of the
markets already covered by Verizon
Content Providers:
Wireless’ EV-DO-based broadband
<
>
Video Content
network, enabling Verizon Wireless to
News, Sports, offer real-time mobile TV services of
Movies, Weather,
> unprecedented quality to its subscribers.
MediaFLO
3G Network
Music… <
>
Media
Distribution
Content Providers:
> System
File Services putting tv in your
News, Text Files, wireless phone
<
>
Music Files,
Stocks…
qualcomm 2005 21
26. a wireless solution
> For tracking and routing work orders to the
field force
“We knew if we finished one extra job per
technician per month through new routing
efficiencies, the wireless solution would
pay for itself. That made our decision to
implement this system a no-brainer.”
Steve Phillips
Director, Memphis Division
Time Warner Cable
a wireless solution
> For commercializing applications and services
“QUALCOMM continues to listen to our needs
as an operator and advance the technological
capabilities of the BREW ecosystem, enabling
us to differentiate our services and offer
wireless subscribers in Japan the most
advanced data offerings.”
Seiichiro Sakai
Director of Product Management Department,
“au” Service and Product Division, KDDI
together with our
partners
22 qualcomm 2005
27. a wireless solution
a wireless solution
> For delivering rich multimedia capabilities
> For enabling physicians to
to network subscribers
prescribe medication
“We’re amazed at the success we’ve seen
“Wireless e-prescribing makes
so far with BREW. As a result of the great
doctors smarter by enabling
BREW technology... we’re taking our
them to screen for interactions
customer experience to the next level,
and find the most cost-effective
beyond voice. We see our Get It Now
treatments. It also adds a layer
offering, based on BREW, as the next
of accountability, which reduces
step in the evolution of creating a richer
our costs.”
customer experience.”
Winston Wong, Pharm. D.
Director, Pharmacy Management Bill Stone
CareFirst BlueCross BlueShield Vice President, Market Segmentation
Verizon Wireless
we are a
catalyst
for
wireless
progress
Our work benefits every link in the wireless value chain. The chain
includes operators of wireless networks and manufacturers of
mobile devices and infrastructure equipment. It also extends to
applications developers and content providers.
But the ultimate winners are the wireless users who benefit from an
expanding array of features and functions on their wireless devices
and an improved user experience.
qualcomm 2005 23
28. partnerships
> we are proud to
participate in the success
of our industry
The rapid growth of 3G CDMA has been made possible in part by an extraordinary
collaboration at every level within the wireless industry. As the saying goes, the whole is
greater than the sum of its parts, and the 3G ecosystem is no exception. Understanding
that every customer and partner is interdependently linked, QUALCOMM focuses on
enabling others as the key to achieving long-term growth and success.
understanding customer needs
enabling our industry partners
Network Operators Businesses and Enterprises
Network operators worldwide are upgrading Businesses and enterprises across all
their existing systems to 3G or deploying new industries are discovering how to streamline
systems to previously unserved areas. And operations, increase worker productivity and
QUALCOMM is providing the road maps to achieve compelling return on investment
enable seamless transition to CDMA2000 by leveraging 3G wireless into their work
and WCDMA. processes. QUALCOMM partners with these
customers to build technology solutions that
Manufacturers are transforming the way business works.
Manufacturers are under increasing pressure
to develop, test and deliver innovative and Government
differentiated devices with compelling QUALCOMM brings unique competencies in
features and advanced data capabilities. adapting 3G wireless technology, applica-
QUALCOMM’s integrated solutions and tions and other technologies to bear on safety
services help them control costs and achieve and security issues, including Homeland
faster time to market. Security and other initiatives on the local,
state and national level.
Application Publishers and Developers
Application publishers and developers need In support of our government as it protects
to streamline their development and marketing and defends our homeland, QUALCOMM’s
processes. The BREW system is one way that interoperable wireless technology empowers
QUALCOMM helps ensure a steady supply of government agencies to have immediate
applications, including: music, 3D games, access to critical and sensitive voice and
assisted-GPS services, photos, video and more. data information, anytime and anywhere.
Content Providers and Media Companies Consumers
Content providers and media companies Consumers have come to expect and
will be able to further extend their brands demand sophisticated wireless experiences.
into the wireless space next year when QUALCOMM and its partners in the wireless
QUALCOMM expects to launch MediaFLO, value chain are joined together to meet that
a cost-effective and efficient method to demand. That is our mission and our
deliver high-quality multimedia content to a ongoing passion.
large number of subscribers for easy viewing
on mobile handsets.
24 qualcomm 2005