Qualcomm Inc. took a major step last week to expand its patent and technology portfolio to include mobile location-based services and wireless Internet systems, announcing it acquired San Jose, Calif.-based SnapTrack Inc. for $1 billion in stock.
SnapTrack will become a wholly owned subsidiary, operating under its own name. The acquisition will contribute to the development of Qualcomm’s gpsOne technology, and accelerate the introduction of more advanced global positioning system-enabled mobile phones, the company said.
“GpsOne uses GPS satellite information combined with information from the CDMA network. Essentially, we will now be able to add to SnapTrack’s specific hooks … and combine them with gpsOne to make a better product,” said Johan Lodenius, vice president of marketing for Qualcomm CDMA Technologies.
The combined technology will enable Qualcomm to design smart phones, personal digital assistants and pagers that will help find 911 callers or provide customized location-sensitive Web browsing services, Qualcomm said.
Lodenius said Qualcomm will work to develop the gpsOne technology throughout the year in an effort to meet the Federal Communications Commission’s E911 Phase II mandate deadline of March 1, 2001.
Stephan Beckert, an analyst with The Strategis Group research firm, said Qualcomm’s efforts to have a product ready for the consumer market is rather ambitious.
Both Nokia Corp. and Motorola Inc. filed a petition in December for the FCC to reconsider its E911 Phase II automatic location information rules, asking the FCC remove the March 1 deadline from the requirements.
“Nokia and Motorola believe that the March 1, 2001, date for initiating the sale and activation of handset-based solutions, which appears to be an effort to `get the ball rolling,’ is unnecessary and places a substantial, deleterious burden on manufacturers of wireless handsets without any concomitant benefit to the public,” the petition said.
Nokia and Motorola asked the FCC to set Oct. 1, 2001, as the new date by which they will need to provide their carrier customers with Phase II, ALI-capable handsets. The FCC has yet to respond.
Beckert also said the $1 billion in stock Qualcomm said it is paying for SnapTrack could put Qualcomm in a financial hole for some time.
“One billion is an awful lot. You have to start thinking about the model they are pursuing and how much is a handset worth on a per-handset basis. How many handsets do you have to sell to recoup $1 billion? That’s a pretty steep hurdle,” Beckert said.
Overall, Beckert said the melding of the two companies makes sense when looking at their future business plans. Both companies want to move away from manufacturing and focus on licensing technology.
“We want to make every phone capable of determining its position,” Lodenius said. “We think it’s (location-based technology) a necessary safety feature and a catalyst for future growth.”
The acquisition is expected to be completed by mid-March.
