Qualcomm's Snapdragon Expanding

Qualcomm Inc (QCOM - Analyst Report) has decided to enhance the performance of Flash Player 10.1 multimedia features for all chipsets based on its Snapdragon platform. Qualcomm has developed smart-book and smart-phone chipsets based on state-of-the-art Snapdragon platform technology. A path-breaking initiative of the company is the convergence of mobile computing with the next-generation Snapdragon platform. These chipsets have been designed for pocket-sized portable computing devices.

Adobe System Inc’s (ADBE - Analyst Report) Flash Player 10.1 is the first browser-based runtime developed by the Open Screen Project joint venture between Qualcomm and Adobe that provides a consistent runtime and delivers web browsing of expressive applications, content and HD video. The Beta version of this product will be released in the fourth quarter 2009.

Qualcomm is all set to start selling chipsets for smart-books from the next quarter. Toshiba, which has already introduced its TG01 smart-phone using the Snapdragon chipset, will also, be the first company to release Snapdragon chipset based smart-book with Flash Player 10.1 support. Nokia Corp (NOK - Analyst Report), the largest customer of Qualcomm, has also entered into a similar partnership with Adobe to develop a multimedia enabled browser.

As of now, over 15 mobile device manufacturers are developing more than 30 Snapdragon-based products. Acer Inc, Samsung Electronics Co. Ltd., and LG Electronics Inc are the notable computer makers that have signed to use Snapdragon chipsets. The chipset market for computer is primarily dominated by Intel Inc (INTCC - Analyst Report). Advanced Micro Devices Inc (AMD - Analyst Report) and Texas Instruments Inc (TXN - Analyst Report) are other major players.

This new venture into the smart-book market will be a vertical diversification for Qualcomm. Using Snapdragon chipsets, the consumers will no longer be required to carry battery chargers together with their laptops. These powerful chipsets will run the computer 24 hours with just one battery charge while receiving data throughout the day.

We believe diversification into mobile computing market was necessary for Qualcomm due to lukewarm growth of the company’s core mobile phone chipset market. Qualcomm’s mobile phone chipset sale is likely to decline by 5%-6% in 2009, first decline since 2001. Therefore opening up alternative revenue sources is essential for the company.

According to our assessment, Qualcomm is best positioned in the industry to diversify into converged mobile computing with its gigantic balance sheet of $15.7 billion of net cash position and its portfolio of superior technologies.

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