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The Qualcomm Equation: How a Fledgling Telecom Company Forged a New Path to Big Profits and Market Dominance

The Qualcomm Equation: How a Fledgling Telecom Company Forged a New Path to Big Profits and Market Dominance

by Dave Mock, George Gilder (Foreword by)

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"Featuring a foreword by George Gilder

If you’re a Qualcomm customer or stockholder, or in fact if you have a stake in almost any cellular service or even just use a mobile phone, you’re no doubt aware of the enormous impact on the development of cellular technology by actress and sex symbol Hedy LaMarr.

All right, perhaps you’re


"Featuring a foreword by George Gilder

If you’re a Qualcomm customer or stockholder, or in fact if you have a stake in almost any cellular service or even just use a mobile phone, you’re no doubt aware of the enormous impact on the development of cellular technology by actress and sex symbol Hedy LaMarr.

All right, perhaps you’re surprised. The telecom industry has never been short on surprises, and the above example is no exception. Nor is it an exaggeration. Read the book.

Similarly, it is not an exaggeration to say that Qualcomm, through a combination of technological superiority, cunning business acumen, and sheer tenacity, has become the undisputed standard by which telecom companies now measure themselves. In short order, they have also become a model of substantial and sustained growth that businesses in all industries should emulate.

Qualcomm’s rise mirrors that of the cell phone itself. Both are ubiquitous, both continue to evolve rapidly, and both turned the status quo on its head. The Qualcomm Equation reveals crucial but little-known information on the history of cellular and wireless technology — some of which dates back to World War II — and shows how the company grabbed the wave just as it began to rise.

How did they do it?

Even while most competitors were using an essential technology, Qualcomm believed in an alternative they had developed, and continued to refine and promote it until at last it caught on. The Qualcomm Equation details how the fledgling company, while their rivals simply duked it out for more customers, made a killing not only by offering great service, but also by leasing their superior standard technology to other telecom companies. While Qualcomm grew its own customer base, they had also, in essence, found a way to make more money the bigger their competitors got.

How can you apply the Qualcomm model in your industry, and in your company?

Following Qualcomm’s example, your company can:

• attract investors by presenting even complex products and technologies in customer- and market-focused language

• prove that its product is essential not only to customers but also to competitors — so that they come to depend on you rather than trying to defeat you

• make its product and its operations compatible with those competitors, turning rivalries into profitable strategic alliances

• learn from setbacks, and leverage the knowledge and strengths of your partners to overcome obstacles

You’ll also learn crucial strategies to help you define and develop your core business; identify and maximize your company’s role and position in the value chain for customers and shareholders; strike a balance between sharing and protecting proprietary information; and handle regulatory and political concerns both domestically and globally.

In the last decade, Qualcomm has come to define dominance not only in the telecommunications industry, but throughout the global business landscape. The Qualcomm Equation presents their story, and the keys to their unparalleled success.

Not to mention the most important role of Hedy LaMarr’s career..."

Editorial Reviews

From the Publisher
"... a probing account of the rise of the company and the development of its multifaceted strategies for dominance."

-Glider Technology Report

The Qualcomm Equation by Dave Mock, is a probing account of the rise of the company and the development of its multifaceted strategies for dominance….In this wide ranging and lucidly written book, he [the author] evokes the personalities, the interwoven innovations, the tumultuous history, the global strategy, and the intellectual property of what has become the exemplary Twenty-First Century Technology Company.”

-Glider Technology Report

“…an excellent read with good reporting on the history of CDMA development in cellular radio.”


"...the book is an excellent read with good reporting on the history of CDMA development in cellular radio."

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The Qualcomm Equation

By Dave Mock


Copyright © 2005 Dave Mock
All right reserved.

ISBN: 0-8144-0818-4

Chapter One

Ecstasy, Pianos, Torpedoes

The Beginnings, World War II to the Mid-1960s

Entire industries can start from a simple idea-a drawing scribbled on a napkin, or a hobby that unexpectedly grows into a full-time endeavor. Bill Gates dropped out of Harvard to play around with new computing devices. Bill Hewlett and Dave Packard started selling electronics from a makeshift workshop in a single-car garage-now designated as a California historic landmark and widely regarded as the birthplace of Silicon Valley.

For every invention that is doggedly pursued until a goal is reached, dozens can be found accidentally or unintentionally. In 1968, a researcher at Minnesota Mining and Manufacturing (3M), attempting to improve tape adhesives, considered a semisticky substance that held for an unusually long time despite its relatively low adhesiveness to be a failure. Then, years later, 3M found a blockbuster application for this tacky backing in its line of Post-it notes, the hugely profitable repositionable notepaper.

In 1886, John Pemberton, an Atlanta pharmacist, developed the original formula for Coca-Cola, using the coca plant and kola nuts, as a nerve tonic for people who were feeling under the weather or fighting an addiction. You can probably guess the rest of that story. Many novel inventions take decades to find a suitable use, while others never do.

But the founders of Qualcomm and the team that backed them had no such problems applying their radical communication solutions. From the outset, they knew exactly where they were going. No one knew how successful they would be, or how their ideas would be received in the marketplace, but there was definitely more purpose to their inventing than just getting a few patents under their name.

The story of how Qualcomm found its niche in advanced communications starts with the origins of what is called spread-spectrum technology. Clever engineers at Qualcomm devised ways to apply this new, radical, and advanced communications concept to everyday communication products around the world. But the theory underlying their work goes back to World War II, when communications came to play an increasingly vital role on the battlefield.

And in this case, the inventor was not someone most people would have expected. In fact, she was an entirely unexpected inventor.

The Mother of Spread Spectrum

A wide chasm can separate an inventor from a pioneer, and an accomplished visionary from a successful inventor. Visionaries conceive and enlighten, while inventors resolve and implement, and the two sets of characteristics are rarely found in one individual. The inner workings of spread-spectrum communications, upon which Qualcomm's code-division multiple-access (CDMA) technology was based, are derived from an earlier discovery by an unlikely source-a beautiful and insightful actress named Hedy Lamarr (see Figure 1-1).

Born Hedwig Eva Maria Kiesler in 1913 in Vienna, Austria, Lamarr's controversial nude appearance in the film Ecstasy in 1933 secured her an acting career that would eventually include appearances in many other popular features, such as Samson and Delilah and White Cargo. That same year, she married the first of her six husbands, Austrian industrialist Friedrich (Fritz) Mandl. Most people saw Hedy Lamarr as simply a showpiece for a powerful tycoon, like many other famous wives. But many would later be surprised to discover her interest and competency in technology and the science of advanced warfare.

Her marriage to Mandl landed her in the middle of interesting conversations on current warfare techniques, as her husband was an arms manufacturer who was doing more and more business with the Nazis. One topic he and his colleagues often discussed that interested Lamarr was the radio control of torpedoes. In battle, naval fleets launched torpedoes from their hulls and then used radio signals (from a plane or ship) to guide the speeding bombs toward their targets.

Unfortunately (assuming you were the one sending, not the one receiving, the torpedoes), jamming the radio signals was a common countermeasure that made the torpedoes far less accurate in reaching and destroying their targets. Since early communications were transmitted on a single frequency channel at a time, an enemy had simply to detect that channel and then blast enough electromagnetic noise to effectively jam the signal (in much the same way that driving under power lines can render music or speech on an AM radio station incoherent). It was no secret that developing a means to avoid direct jamming would greatly increase the effectiveness of naval fleets, but a solution to the problem was elusive. While most of her husband's colleagues assumed that Lamarr had no clue about her husband's work, she later returned to the challenge of guiding torpedoes and showed that there was more to her than just a beautiful face.

Lamarr became increasingly repulsed by the Nazi regime and her husband's involvement with it, and in 1937 she decided to escape her caged existence. After fleeing Austria, Lamarr moved on to Hollywood after Louis B. Mayer of MGM convinced her to sign a movie contract with the company (when she adopted the name Lamarr). With a new life and a film career in full swing, Lamarr met popular composer George Antheil at a Hollywood dinner party. The two teamed up in what was to become one of the most unlikely pairings to support the U.S. war effort.

It turned out to be a natural fit-Lamarr's interest in technology was complemented by Antheil's knowledge of music fundamentals. The two started spending more time together-not courting, but rather discussing how to solve the problem of American torpedoes being jammed by Nazi signals. Antheil helped Lamarr discover through music the key to communication methods that were immune to the then-current jamming techniques.

Antheil had become well known for developing symphonies using several instruments and sonic mechanisms. Some works called for coordinating several automated player pianos, drums, gongs, and even airplane propellers. The artist never heard some of these symphonies, as synchronizing all these unusual instruments successfully was impossible at the time. But this did not deter Antheil from accurately describing how such synchronization could be done. Today, musicians and composers use powerful computers to play his symphonies. Though Antheil credits Lamarr with being the brains behind their joint developments, there's no doubt that his vision of synchronization influenced what was to become Lamarr's concept for discrete radio communication.

The initial concept for their torpedo guidance system was literally scribbled in pencil on an envelope from Antheil's home. A sketch of the communication method on the back was accompanied by a short description on the front. The basic idea for this novel concept, which eventually became known as frequency hopping, was thus immortalized on a scrap of paper. Lamarr and Antheil captured the main principles of a jam-proof communication system in a simple picture and little more than a hundred words. The essential idea entailed jumping from frequency to frequency to elude jamming. The challenge involved synchronizing the hops of both the sender and the receiver-as in musical orchestration. The system could be scaled from relatively crude to ultrasophisticated, depending upon the degree of secrecy necessary and the intricacy of the technology used.

Lamarr and Antheil spent more time working out the details of how their idea would be implemented and pitched the concept to the National Inventors Council, which was headed by Charles F. Kettering. Started in early 1940, the council culled ideas from the general public and encouraged support for the war effort (especially from women). Kettering suggested that they continue to develop their idea into functional form, while others encouraged Lamarr to instead put her star power to use in selling war bonds (which she did very successfully as well).

Antheil and Lamarr's work culminated in U.S. Patent 2,292,387, "Secret Communication System," granted on August 11, 1942. The patent, filed under her then married name of Hedy Kiesler Markey, describes how a torpedo can be guided by a method of communication that hops among carrier frequencies at a regular time interval (one of the patent diagrams is shown in Figure 1-2). The synchronized changing of the carrier frequencies used by both the sender (a high-altitude airplane) and the receiver (an active torpedo) was controlled by identical player piano rolls marked with a unique sequence of eighty-eight possible steps (the number of keys on a piano).

"I read the patent. You don't usually think of movie stars having brains, but she sure did." - Franklin Antonio,

Qualcomm Founder

This meant that the torpedo could be steered by sending only small portions of the entire message on each frequency. Attempts to jam the communication would typically render only one of the channels useless at a time, and the information on the other channels would be enough to enable the torpedo to make the necessary course corrections to reach the target.

What Lamarr and Antheil gave the U.S. military and the world was the concept of frequency hopping, which broke the conventional mold of communicating over a single frequency-the method that had been used since the inception of radio. Today's spread-spectrum communications techniques are derived from this concept of using multiple frequencies to transmit information. And even though spread-spectrum technology contains many more novel elements, Lamarr and Antheil's elegant frequency-hopping concept remains an integral component of many spread-spectrum implementations.

Unfortunately, neither Antheil nor Lamarr made any money from the ideas captured in their patent, even though it is the basis for hundreds of others that followed. Out of a sense of patriotism, both decided to donate the patent to the U.S. war effort. Few people understood the profound implications of this discovery at the time, but it marked a transformation from narrow thought and opened up the wide world of spreading communications across frequencies. Even though no one could make the device described in the patent function at the time, the U.S. military classified the patent and held the concept under tight security for decades.

Military Applications

Very little is openly known about early military experimentation with the frequency-hopping concept that Lamarr and Antheil had so brilliantly laid out in their patent. Since the patent described a mechanical means of switching frequencies, the actual implementation of a device using the parts described was nearly impossible because of the speed and accuracy required. Many people figured that the mechanical piano rolls could not be synchronized and switched fast enough to produce reliable communication. In addition, Antheil himself noted that the player piano mechanism described was probably a poor choice to use in pitching their concept to the high levels of the military. He figured that they had surely laughed at the notion of installing player pianos in their torpedoes. As far as anyone knows publicly, the United States was never able to frequency-hop a torpedo into a Nazi cruiser during the war.

One of the earliest known implementations of frequency hopping while it remained classified was in the mid-1950s. It involved two-way communication between aircraft and devices called sonobuoys-cylindrical devices that were dropped into the ocean by airplanes to search for enemy submarines by using sonic emitters and sensors to listen for submarines in the area. Several buoys placed in a pattern could triangulate the position of a submarine.

The Hoffman Radio Corporation was given a contract by the Navy to build the sonobuoys and the accompanying airplane radios, and the Hoffman engineers were given the Markey-Antheil patent upon which to base the design. The names of the inventors were removed from the document, and the information was given under extreme secrecy, with the U.S. Navy offering information only on a "need to know" basis. Since the patent was dated more than a decade earlier, the engineers at Hoffman figured that the advanced concept came from some brilliant engineers in the military or defense sector. Little did they know that they were exploring one of the earliest implementations of the brainchild of a beautiful actress and a creative composer.

Frequency hopping played a vital role in retrieving the data from the sonobuoys. The sonobuoy used a mechanical spool that had protrusions spaced around its circumference in a unique pattern. The protrusions activated individual switches as the spool rotated at a fixed rate, with each switch representing a different frequency. The airborne radio communicating with the sonobuoy carried an identical spool to match the frequency hopping, which took place at a rate of approximately thirty-six hops per second. To talk to multiple buoys, the plane's radio used several spools, one for each buoy, making communication with each buoy secure and undetectable.

This implementation of a mechanical device for frequency hopping was actually not far from what Antheil helped Lamarr convey in their patent using piano rolls. By today's standards, the sonobuoys used a crude and simple implementation of a complex concept, but they were sophisticated for their time, considering the challenge of synchronizing the communication. Many other engineers at Hoffman and elsewhere later went on to develop more products under military contract using frequency hopping, among them an unmanned surveillance drone that was used in the Vietnam War. This implementation in the 1960s, however, took advantage of new digital computing technologies rather than mechanical means for frequency hopping. All the while, the source of the original patent and the diagramed techniques was unknown to communications engineers. (Spread-spectrum technology was not declassified by the U.S. military until 1981.)

Over time, the development of the electronic transistor made the implementation of frequency-hopping techniques much simpler. The move from mechanical to electronic means of frequency synchronization fueled its widespread implementation. The concept of frequency hopping fit naturally with digital technologies, since the communication channel needed to change at discrete points in time. Though this was dramatically different from the conventional radio wisdom of the time, the necessity for jam-proof communications in the military drove ongoing work in spread-spectrum techniques.

It is certain that the U.S. military and its allies initiated scores of new implementations of frequency-hopping techniques in the decades following the original patent, many of them probably unknown to the public.


Excerpted from The Qualcomm Equation by Dave Mock Copyright © 2005 by Dave Mock. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.

Meet the Author

Dave Mock is a practicing engineer and consultant to the telecommunications industry, and has written extensively for online and print publications, including The Feature, Unstrung, and The Motley Fool. He is also the author of Tapping Into Wireless. Mr. Mock lives in Placentia, California.

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