Businessmodel of Qualcomm

Customer Segments

Qualcomm has a niche market business model, with a specialized customer segment. It markets most of its products to manufacturers of wireless devices that require integrated circuits.

Value Proposition

Qualcomm offers two primary value propositions: innovation and brand/status.

The company’s entire history has been one of innovation, being the first to introduce a commercial application of CDMA. It has maintained this quality with the introduction of superfast processors such as Snapdragon and new server chips based on ARM.

The company has a strong brand in large part due to its long history and its status as a first mover in a variety of product areas. The success of its early products helped spur the U.S. Telecommunications Industry Association (TIA) to adopt CDMA as a digital wireless standard.

Channels

Qualcomm’s main channel is its direct sales team, through which it acquires customers. The company also promotes its products through its website and social media pages. Further, it markets its offerings through advertising, participation in trade shows and technical conferences, the writing of white papers and business cases, and the creation of marketing development funds with customers.

Customer Relationships

Qualcomm’ customer relationship is primarily of a self-service nature. Customers utilize its products and services with limited interaction with employees. That said, there is a personal assistance component as the company offers e-mail support.

Key Activities

Qualcomm’s business model entails designing its digital communications products and providing relevant services. The company relies on a limited number of third-party vendors for the manufacture of its offerings. These contractors are largely located in Asia.

Key Partners

Qualcomm has three main categories of partners:

Distributors – Mostly located in China, but are also based in India, Singapore, Japan, and South Korea. Specific partners include Uniquest Corporation, TOMEN Electronics Corp., Maxmega Electronics, AqTronics Technologies, and China Electronic Appliance Shenzhen.

Module and Software Providers – Suppliers of modules and software. Specific partners include Ayla Networks, Proximetry, Silex Technology, Temboo, and Wisol.

Authorized Design Centers – Facilities that research novel applications for Qualcomm’s technology. They have expertise ranging from RF design to driver development. Specific partners include Abicom International, Compex Systems, Embedded Wireless, L&T Technology Services, and Savari Networks.

Key Resources

Qualcomm’s main resource is its engineering team. Its technology employees have significant knowledge of CDMA, OFMDA, and other relevant technologies, and work in R&D centers located throughout the world. The company also relies heavily on its sales/marketing staff in order to acquire customers and to promote its offerings.

Cost Structure

Qualcomm has a value-driven structure, aiming to provide a premium proposition through extensive research and development. Its biggest cost driver is cost of equipment and services, a variable cost. Other major drivers are in the areas of R&D and administration, both fixed costs.

Revenue Streams

Qualcomm has two revenue streams:

Equipment and Services – The prices it charges for purchase of its physical products (primarily integrated circuits) and service offerings.

Licensing – The fees it charges from the licensing of its intellectual property, including software, patents, and other rights.