SAN DIEGO/CAIRO: Qualcomm, which designs, manufactures and markets digital wireless telecommunications products and services, will open an office in Egypt by the end of 2011, its regional president said.
Jay Srage, Qualcomm’s president of the Middle East and Africa, said this is in addition to an office in Riyadh and expanding the Dubai office.
“With Qualcomm having new focus on emerging markets, the MEA markets become quite important because they are a big growth engine behind the global growth in 3G handset and smartphones,” Srage told Daily News Egypt on the sidelines of a conference at the company’s headquarters in San Diego.
“Now we are investing more in the region,” he added, and that will continue “with more people and more emphasis on enabling our partners.”
When it comes to Egypt, the company’s strategy has been to make the three mobile operators — Mobinil, Vodafone and Etisalat — successful by expanding the availability of 3G services and promoting the use of wireless mobile devices.
Qualcomm’s three-year presence in the MEA has so far entailed understanding market dynamics and building partnerships in order to reach the execution phase of the strategy they had set out to implement.
Once it lays the foundation by enabling its market partners ¬— operators, handset manufacturers and app developers — Qualcomm can then come in and offer its products and services on a wider scale.
“Now we go to the next step, there’s a significant talent pool in Egypt, Jordan and the UAE…that we will take advantage of. What you need first is to [figure out] what is the right activity and development that you want to build,” Srage, also vice president of Global Business Operations, said.
When it comes to the future of Qualcomm’s research and development work in the region, he said, “demand will drive the technology and then we will build the center that will [develop] that technology.”
The R&D centers come at a stage when activities in the market reach a certain level of maturity, “where you need to build specific technologies and products for that market, which can apply at a global level — some are market-specific and others are global,” he explained.
For example, the company signed an MoU with an Abu Dhabi firm to manufacture wafers and chipsets. As that relationship continues, there will be a need to build “an ecosystem around it,” thus creating the need for an R&D center, he said.
“Same thing applies for Egypt. When there is a need created to build a development center for a specific technology, we will definitely evaluate it and invest in it. But it’s not a random approach that we do take for building up development centers,” explained Srage.
Similarly, Qualcomm’s expansion strategy is market-driven.
“Today we are focusing in Africa on these three markets because they have the major components of an Africa strategy…so having presences in those markets will impact our activities across the whole continent.
“Whenever we work with one operator group or one entity in a major market, it has a ripple affect across multiple markets,” Srage said.
“Our investment is fairly smart and efficient when it comes to having the largest impact. Even at a corporate level, the number of employees we have compared to revenue, that number is quite efficient compared to other semi-conductor companies.”
Regional operations
While it’s difficult to quantify investments and the region’s contribution to overall revenue, the way Qualcomm measures its success in different areas is mainly by tracking 3G device sales because that means the space is being created for its products and services.
“The way we track our performance is through 3G device sales, so we have a forecast for each region, with our presence how it will look like and if we were not there how it will look. That incremental impact measures the result of our activities,” Srage said.
The ecosystem the company builds comprises operators, handset manufacturers, app developers and some retailers.
“When you work with an operator to influence them in a certain direction, for example, telling them they need to work on HSPA+ [a data speed of 21 to 28 Mbps], and they do the deployment, you cannot quantify the outcome and how much revenues in dollars…what we know is that we drove the market towards 3G,” he explained.
The six MEA markets of Egypt, UAE, Saudi Arabia, South Africa, Kenya and Nigeria are driving more than half of the growth of 3G handset penetration in the region, according to Srage.
“In Saudi Arabia, there is 49 percent 3G handset penetration and above a third of those are smartphones, so you can see the kind of maturity of the market. A year ago it was at 25 percent. We had an impact on that growth,” he added.
“The range is from the low single digits in some markets to 30-40 percent where we are fairly active and to upper 40s where it’s a mature, high-income market.”
Egypt specific
The company’s cooperation with mobile operators is centered on three activities: technology, devices and services.
Qualcomm played a role in working out the deal between Mobinil and Huawei, the China-based telecom equipment company, whereby Mobinil launched its own branded handsets, which are Huawei devices.
“On the devices side, we tend to introduce the operator to what’s out there, because we are the chipset supplier to close to 50 percent of 3G handsets,” Srage said.
On the technology side, deploying HSPA+ entailed providing engineering technical support to Mobinil.
Last February, Qualcomm announced with Mobinil the launch of Mobile Baby, an app offered by Mobinil allowing pregnant women to take ultrasound pictures over their smartphones and share them.
“With Vodafone because their procurement is mainly headquartered in Europe, we tend to focus on technology training [in Egypt] and significant engineering support in the field to optimize the network so that you get less dropped calls, better performance, etc,” he said. “And same with Etisalat, we focus on the technology and services side.”
On the commercial side, Qualcomm’s operations have not been affected by the recent political developments in Egypt, although its regulatory, government-related activities are on hold during this transitional phase.
However, Srage said, “The strategy has not changed because the spectrum allocation and the licenses and the direction of the telecom industry in Egypt has not changed after the revolution.”
Even though it is still the same regulator, Amr Badawai head of the NTRA, “if the government is still in transition, there’s little decisions he can make,” Srage said. “So we want to ride that transition out and when the new government is in place we’ll see how the change will impact the regulatory organization.”
Still, he is optimistic that business processes will be easier in the future.
“There was a lot of political play between the military and the government and the NTRA around the spectrum and what you do with it, and it was a tough balance between the three. If things go in the right direction then [Egypt] will end up with an open free market driven by economic growth, and if that’s the case, then everyone will work towards that goal.
“Before it was more of personal agendas so it wasn’t really to drive growth, it was like who can get the most interest out of whatever decision is being made.”
A recently launched marketing campaign is a collaboration between Qualcomm and Delta Group, who own Mobile Shop and Radio Shack. “In those stores, Vodafone sponsored a data package of Qualcomm-based devices, which is a new concept that says if you have a Qualcomm handset, you’ll get a free data package,” he explained.
“We’re starting to offer accessories and data packages with these handsets to offer enough incentive to consumers. From an operator perspective, it’s tying connectivity to the smartphone. …the idea is to get them hooked to smartphones.”
As smartphones becomes the main connectivity device in markets where there is low broadband internet penetration, Qualcomm is also working with manufacturers to reduce the price of smartphones. For many people in developing countries, the company predicts, their first access to the internet will be through mobile devices.
Health and education
“Healthcare and education are two very important businesses for Qualcomm and we already kicked them off in the Middle East,” Srage said.
The company launched a healthcare project in Egypt with Orascom and Mobinil where skin diseases can be diagnosed by doctors using a picture sent by the patient. The trial phase was in specific areas in Egypt and the next step is to increase the number of hospitals and doctors who use this service.
But the goal when it comes to healthcare and education is wider, “We aim to make it a nationwide initiative, because the idea is to have mobile health integrated into the nation’s policy on healthcare. We want every physician to have a connected tablet to communicate with the client remotely,” Srage said.
In countries like Egypt, where healthcare facilities outside the main cities is in dire need of improvement, services like this one can help bring healthcare to areas where access has been traditionally lagging.
In Jordan, Qualcomm is working on a project with the Jordan Education Initiative, which aims to get broadband to developing areas and rural cities through smartphones.
