Qualcomm’s Revenues Up 40% in Q1. Will This Keep Up in 2012?

February 1, 2012
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Qualcomm managed to bring 40% larger revenue compared to the same time last year, and also 14% bigger compared to last quarter. Profits also hit 1.4 billion, which is a 20% increase over last year’s profits, and a 33% over the last quarter. It seems that compared to last quarter alone, they managed to sell 23% more chips, accounting for 156 million units in total.

Qualcomm is clearly doing well in the mobile market right now, and I think we can all pinpoint to the exact moment in time when brand awareness played a huge rule in skyrocketing Qualcomm’s numbers over the past 2 years. It’s when Qualcomm was the first to make a 1 Ghz ARM processor.

Although, the Nexus One wasn’t technically the first phone to use it (it was some noname Toshiba smartphone), it did help jumpstart the avalanche of brand awareness that Qualcomm got later for their Snapdragon processor. I remember when for most of 2010, everyone  was using the 1 Ghz Snapdragon processor as the standard to which they compared all future processors in smartphones.

It wasn’t until Tegra 2, when Snapdragon started losing some of that mindshare it gained a year before, and then came Samsung’s Exynos, which took us all by surprise with how good it was compared to the competition. Although Qualcomm is doing very well right now financially, I believe it’s mostly because of inertia.

The way market inertia works, is that once you have a great product, and the core market hears about you, it will be a while until the rest of the market hears about your product, and how good it “was” (not necessarily “is”). So even if that company loses competitiveness for its products, that same part of the market that heard last about how good it was in the beginning, will also be the last to find out that their products are not so good anymore compared to the competition (RIM is a good example for this).

Fortunately for Qualcomm, they do have a chip that, besides Cortex A15, will be the most exciting chip of the year 2012, and that’s the S4 chip based on the new Krait architecture. I expect this year to be all about Cortex A15 and Krait. The early adopters will lose interest in everything else as soon as these hit the market. The jury is still out on how well S4 compared with Cortex A15 in both performance and energy efficiency, or as an overall chip, but no matter the outcome, Qualcomm should continue to do very well with its chips in 2012.

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