Transforming Nations – Paul E Jacobs at US India Conference

AIMA in its endeavour to promote innovative and global management thinking among Indian enterprises, organised the US-India Conference in association with Haas School of Business, University of California, Berkeley on 8th July, 2016 on the theme ‘Managing India’s Growing Role in the Global Economy : Opportunities for India-US Partnership’ in California, USA.

Below is an excerpt from an informative speech of Paul E Jacobs, Executive Chairman, Qualcomm Inc at US-India Conference 2016 on ‘Transforming Nations – Empowering people with knowledge and technology’.

Paul E Jacobs speaking at US-India Conference 2016

Paul E Jacobs, Executive Chairman, Qualcomm speaking at US-India Conference 2016

“Thanks everybody. Preetha and I know each other for quite some time actually due to the US-India CEO forum. We have  had lots of good discussions about how to use mobile for health care and we’re going to find some really good projects to do together so  we have been working at it but

Qualcomm has been in India for quite some time and it really is very important for us. I thought in the context of this Conference and session, just talking about how mobile technology really has been a catalyst for change, an opportunity for partnership, and it’s not a theoretical thing it’s something that we have long history doing and I am going to show you some historical information about what happened in India that made fundamental changes in the way that people were able to interact with each other and interact with the world around them for all sorts of your positive reasons. You must have heard some statistics already in terms of the reach of wireless technology. I am sure that everybody in this room has a smartphone and probably most of these Smartphones have a Qualcomm chip in them and almost certainly that chip has content that was designed in India. So almost certainly all of you are carrying around some technology that was designed in India and you use it every single day and your life pretty much depends on it.

I would say that wireless technology is the biggest technology platform humankind has ever created. There are 7.4 billion connections right now, that’s not 7.4 billion individuals obviously but probably about half of that are unique individuals and it continues to grow as time goes on. It’s so pervasive that it said that more people have access to cellular technology than have access to electricity or running water. We all hear stories about people in rural areas who have to hike somewhere to go get their phone charged and then return to their place where they live or inhabit and use their phone. We want to change that and make sure that it is pervasive everywhere that people have the ability to not just communicate but charge their phone, get education and get all the benefits from this. So this platform is amazing and it has created tons of opportunities in all sorts of areas healthcare, education, entrepreneurship, public safety, and e-governance. We’ve heard about smart cities, I’m going to talk a little bit about smart cities as well so all these kinds of areas are enabled by this tremendous platform so let’s talk about the past a little bit.

I actually went to India while running a program called ‘Wireless Local Loop’ which was taking a thing that was a cellular telephone but packaged up in to a box  that looked like a landline phone and I  actually went on the first engineering trip to go map out the spectrum and figure out where we’re going to install the equipment and so forth and we went back and we went to install the first telephone at the head of MTNL’s office and so walked  in plugged  it in and went to walk away and he said, ‘what  you’re going to  install some equipment here?’. We said ‘Yes we did. That’s it’. And so he picked up the phone and called his wife and his wife said it was the best phone call she had heard on the system  so  I thought we were in, took a little bit longer for things to move along, I think I was there in the middle of the nineties and by the end of the nineties though the wireless local loop systems  had come out  and  MTNL started by  lowering  the rates. The  government  then  allowed the wireless local loop, these were fixed  operators  to have limited mobility  rights,  that  also  put  pressure on the  rates  of the GSM  systems because the mobile operators were running GSM and the rates  kept coming  down and now they’re  quite inexpensive. I worked with a number of companies, Reliance was the key early partner of ours, driving the systems out, driving the prices down. I would say that we as a company are incredibly proud of being part of that and we talked about partnerships here that was absolutely a partnership with the local Indian operators and the Indian government. It took more than a village to create this kind of an amazing dynamic and now what’s going on is that we’re going to mobile broadband.

 So that was a lot about voice connectivity and very slight data connectivity  but now we’re talking about mobile broadband and you can see  the kind of  growth and there are over a billion connections in India today. There are probably 180 million connections on the mobile broadband systems 3G/4G systems but that’s changed. There are projected to be over 540 million connections and these are state-of-the-art 3G/4G connectivity and there is a lot of effort going around building that out and we also had a key role in causing the change for 4G to go to global standard. We actually went and spent a billion dollars on spectrum in India which is a long story but that spectrum now is being used by Bharti to provide 4G services. There is a strong demand for the mobile data traffic and video content consumption; the mobile data traffic grew by 74% in 2014 and 89% in 2015.  You are seeing a huge growth in demand for mobile data and this was done by a broad ecosystem of partners, this was not Qualcomm by ourselves, this was a lot of partnerships. Building that ecosystem and having our heritage as a company is a part of what the opportunity for the future is right now because what we were able to do by working with partners for example in South Korea and in China brought companies like LG and Samsung from being manufacturers of consumer electronics to being world telecom players. Similarly in China you see Huawei, ZTE and Xiaomi, these companies started as very small players in telecom industry and we worked with them and helped them build up their manufacturing design capabilities. I believe now is the time that we were right at that time in India. We are really focused on a lot of effort in trying to make that happen and we’ve been in India for quite some time so it’s not like this is some new effort for us and we’re not just coming because now is the time, we’ve been here a long time and we have a lot of people in India already.

As a part of this revolution where everybody’s got a smartphone and smartphones are the main way through which people in many markets get their access to the internet. There’s not as widespread penetration of PCs as of smartphones. So the smartphone is the connectivity methodology and now the question is how do we get more of them and how do we make them less and less expensive and that was another area of a lot of pride for us because over the history of the company we’ve been trying to drive the cost down. When it was just feature phones and the CDMA phone cost was around $40 at the time we were charging 5% royalty on it and people said, ‘Well, why don’t you make that royalty 0 and make the phone $38 and how can you charge people in India a royalty?’ and we said ‘Look, we’re going to take that money and invest it in research and development. We’re going to build an ecosystem,  we’re going to drive prices down and it will be half that price so instead of being a $38 phone, it’s going to be a $20 phone or a $16 phone and low’. That business model was right and it drove the cost down and it’s doing the same thing now in the smartphones so you see very high featured smartphones in the 5000Rs level, $75 kind of level there’re some for $50 U.S. is continued driving the price down and that will go even faster I think to the extent that we get more and more Indian based manufacturers in and designers into this echo system worldwide. It’s a great opportunity because the projections for the next five years are 9 billion smartphones to ship.

We’re expecting that in emerging regions the smartphone installed base will go from 2.4 billion in 2016 to 3.6 billion in 2020. So there’s this whole new opportunity for India to leapfrog and go into the Internet of Things. Healthcare, smart cities, big automotive transportation, in all these different areas there’s tremendous opportunity because there’s going to be more of Internet of Things, things of stuff connecting to other stuff into the cloud and private clouds. People are talking instead of 9 billion smartphones its 20 billion ‘Internet of Things’ or 50 billion ‘Internet of Things’. So the numbers are staggering, the opportunities are tremendous and we’re doing some work also on smart cities. We have a project in Jaipur with Jaipur development authority to create an innovation hub focused on smart cities and on smart city technology. It’s a lot about energy management and transportation management. I think India is a wonderful place to showcase the real benefits and there are huge opportunities there. A smartphone itself is great and this is even more exciting one.

Now it’s not just mobile broadband as we look to the next generation of technology. Mobile broadband is great and we’re going to go to the next generation and make things faster, just click and you’ll get things, more video more virtual reality, all kinds of wild applications people are talking about. But health care, these are the mission critical services you don’t want the call to drop when your life depends on it. So 5G is going to be about that as well. It’s a suite of different technologies able to adapt to different applications and I would say this is the first time where the technologies are application driven even to a greater extent; for sure 4G\3G we thought a lot about the internet and video and those things but this is really about spreading mobile technology into many other industries with very secure and reliable connectivity. With the Internet of Things part of the issue is that you’re going to have a lot of them, they’re going to be very cheap they can be spread all throughout the world they got to be very power efficient and they have to be very secure. There are huge opportunities but also very specific kinds of demands on the system that’s going to connect all those things to rest of the cloud and I think India is in a wonderful position to benefit and also to be in the place to help design that as well. And so that notion that we have these applications of, what’s it really about, fundamentally it’s about the people that use it and what can we do and if you look at some of the numbers, internet access in the emerging regions by mobile technology in 2010 was about 870 million people; In 2015 it was 2.5 billion people and in 2020 it is projected to be 3.8 billion people. So the numbers continue to grow very dramatically. 76% of the total internet user base in India comes over mobile devices and so that’s a queer impact but there are some other things that we’ve been doing with the mobile technology.

We have a program called ‘Wireless Reach’ where we use the connectivity, work with NGOs, work with local device manufacturers or wireless operators and we do programs for social benefits  and some of these are well-known so this is a little bit of history but may be  you’ve heard ‘Fisher Friend’. Fisher friend was an application that we started  in the aftermath of 2004 Indian ocean tsunami where the fishermen were  scared to go back out on the water they didn’t know what the weather conditions were going to be like. This program started on feature phones with very low data rates, now of course it has moved along to better capabilities but still that fundamental  inexpensive connectivity gave the ability for the fisherman to know not just about  the weather conditions but which port to go bring their fish to and if there have been economic studies done showing the improvement in their economic conditions based on having access to this technology, I would say that the Fisher Friend was a huge success, started in India we actually brought it to other countries around the world. And another one is in education. We partnered with Sesame Street (Gali Gali Sim Sim) and did some applications that were downloaded, taught math and literacy and so forth. These things have been used very broadly by children in India also on relatively inexpensive devices and as we were able to drive the cost of the devices and service down, we get much broader usage.

We’re quite focused on this notion of how do you get mobile broadband to more schools and one of the things that we’ve come up with is a satellite system that we’re building; Sunil Mittal from Bharti is one of the founding investors with us,  Airbus and Virgin, you may have heard Richard Branson talking about this thing. We’re building over 700 satellites which will provide mobile broadband everywhere and the idea is that schools are one of the key places that we want to have connectivity and it actually will provide the connectivity from the satellite to a very inexpensive base station that will have a full solar power and the antenna to go up to the satellite. So essentially you take  this box, you put in place and allow it to see the sky, it gets its power and connectivity from the sky and then it radiates 3G, 4G, Wi-Fi all sorts of connectivity. It can have content caches inside it so that the curriculum can be downloaded to the devices. It really is an interesting opportunity and what this will do is provide connectivity, we’ll see how that all plays out. We’re going to put the test satellite up in 2017 and the constellation will go up in 2019. We’re building the stuff right now as we speak. There is a factory that just got set up in Florida; its turnout is 700 plus satellites. We’ve already designed the second generation to get even more mobile broadband out there. This I think is going to be quite exciting because now we won’t talk about cellular coverage in terms of ‘Coverage of Population’ which is how people talk about it today, we’ll talk about it in terms of ‘Coverage of Geography’ meaning that there are places that are lightly populated or that people just pass through which have no connectivity now with a box deployed they will have that in the future. It’s a very exciting vision.

Another vision that we are in a 100% support of is ‘Make in India’ vision of Prime Minister Modi and I had this wonderful opportunity before his speech in Silicon Valley. We’ve got a chance to sit down and he was asking the CEOs in the room what suggestion you have, I said “well, it’s not just about making in India because you have this huge competitive advantage of design in India as well” and he really picked up on and it was quite exciting because during a speech he sort of talked about design in India and nodded towards me so I felt like my messages gotten through. But it’s an opportunity to create a lot of job growth and we’ve done studies maybe 2.4% of India GDP in 2014 was from mobile, expect over 2 million jobs in India to be created over next few years and about half a million of those being small medium enterprises. So the quotes are interesting we’ll see how it plays out but the opportunity is there and we’re actually in India doing a number of things to try and accelerate innovation. We have a ‘Design in India challenge’ that’s going on, we had 10 finalists in April, we’re going to have the winners at the end of 2016 and we have an innovation lab that we launched in Bangalore so we incubate startups there and we kind of combining these challenges along with the infrastructure to help the companies actually take their devices to commercial readiness with engineering support and other kinds of resources that we can provide them. We have this ‘Women in Tech’ obviously a critical issue globally getting more women involved in technology but this is a thing where we are engaged with high school girls in Bangalore, building mobile applications and then we have an Indian investment fund where we have a $150 million fund.

We have actually been investing in India since 2007 and we have over 20 companies Map My India, a mapping company; Apps Daily, it’s a mobile app delivery; Reveries Translation; Portea, home medical services, so we have a number of areas where we are trying to be more engaged in India than we have in the past. And I have to say that we have been very engaged in India in the past and we really have very high hopes and we will continue to build our workforce at more locations with more employees and so more and more of the stuff that’s in your pocket will be designed in India in the future.

I look forward to working with all you to make that happen. Thank you.”

Watch the full session here:

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