Qualcomm vs Apple: the race to own Bluetooth audio

The 3.5 mm headphone jack isn’t dead yet, but some manufacturers are rather unscrupulously pushing consumers towards Bluetooth and into their broader product ecosystems. Regardless of the persistent quality and connectivity issues, the convenience of wireless headphones is seeing big growth in demand. Apple has seized on this opportunity, doing what it does best by marrying convenient works-out-of-the-box technology and software services like Apple Music with high-end marketing. In addition, the growing market for wireless speakers and smart home products is pushing wireless connectivity to the forefront of any audio product’s feature list.

In the Android space, Sony is perhaps the most suitable comparison to Apple, with its own Xperia handset brand and a popular range of wireless headphones and even its own smart speaker. However, Sony has nowhere near the mobile market share that Apple can capitalize on, and although its LDAC technology might catch the eye of the audiophile crowd, it has nothing like the brand penetration of Apple’s Beats. Google is also competing in this space with its Pixel Buds and Home speakers, but its audio reputation is only just getting off the ground.

When it comes to smart speakers, Apple is undoubtedly late to the party and has a long way to go to catch up with market leader Amazon and second place Google. Still, with HomeKit integration and a huge smartphone install base, if anyone has a chance of catching up, it’s Apple. And when combined with the rest of its ecosystem, the company is clearly making a broad play for audio. Is anyone else able to grab such a big slice of the market?

Enter Qualcomm, best known in mobile for its Snapdragon processors but with an ever growing portfolio of cutting-edge audio focused hardware for headphones and speakers. While its headphone aptX codec is relatively well-known, the company is hard at work to provide manufacturers with features that make Bluetooth headphones and wireless speakers more useful and appealing to consumers. There’s also a growing segment of the smart speaker market being filled up by brands outside of Amazon and Google, many of which need hardware platforms to get their designs off the ground.

Apple and Qualcomm have two very different business approaches to the wireless audio market, but these are emerging as the two companies that are most likely to clash.

Branding vs hardware

As is usually the case with Apple, the appeal of its products doesn’t necessarily rely on having the very best hardware, but on the power of its brand image. From the iconic look of its AirPods to the huge marketing budget and celebrity endorsements of its Beats brand, Apple is highly visible. Qualcomm, on the other hand, has nothing to go on but its underlying hardware, as it doesn’t sell any final products to consumers.

Apple’s solution doesn’t support the high sample rates or 24-bit audio often sought after by the enthusiast end of the market. It’s AAC codec is limited to just a 264 kbps bitrate, which is a lower transfer rate than aptX, aptX HD, and LDAC. However, you won’t have to worry about any reconversion issues when streaming files from AAC-based services like Apple Music. Even so, it’s clear that Apple isn’t targeting the truly high-end specifications that often catch headlines in audio circles.

Apple’s audio strategy doesn't rely on high-end codecs or trends like Hi-Res audio, instead premium branding and instant pairing are the key selling points.

Instead, Apple’s strategy relies on its traditional combination of premium branding, see Beats, along with its “just works” mentality. You only have to look at the super simple way that its AirPods connect to a smartphone for the proof, which is a lot faster and less fiddly than connecting traditional Bluetooth headphones. Apple’s end-to-end control over its hardware pays dividends here, simplifying its implementations and allowing it to exert influence and control over what is otherwise a universal, albeit rather basic, wireless standard. Of course, Apple has to support all Bluetooth products too, but its best features are reserved for its own products.

In this sense, Qualcomm is no different. Looking at its latest Broadcast Audio and TrueWireless technologies, you have to send audio from a compatible Snapdragon smartphone to a product running one of the company’s latest wireless chips. This is because augmenting the basic Bluetooth standard with additional features often requires unique hardware additions, along with proprietary software.

Qualcomm doesn't sell headphones but is instead solving hardware issues like true wireless, multi-channel sharing, and battery life.

Qualcomm’s business model could not be more different from Apple’s. While Apple builds technologies for its own products, Qualcomm designs parts and features for other companies to implement, and it’s catering to both source and playback hardware, such as smartphones and speakers. The company is building an audio ecosystem with a unified feature set that can rival, if not surpass Apple’s closed platform.

It’s not perfect, but without Qualcomm undertaking this work behind the scenes, we may have ended up with dozens of different incompatible proprietary solutions, where Sony, Samsung, LG, and others all locked their best features away behind proprietary standards. Such a situation would be a nightmare for consumers to navigate.

Solving problems

Unfortunately for us consumers, Bluetooth was never really designed for high-quality audio and hasn’t been updated in a meaningful way to cater to today’s more advanced, high-end features and needs. High bit-rate audio, instant pairing, strong and stable connections at a distance, true wireless, broadcasting to multiple devices, and sharing connections aren’t supported by default. Instead these require third-party advancements to make possible.

A couple of companies and wireless audio codecs have stepped in to try to tackle the quality issue, as the baseline SBC option really doesn’t cut it. Ideas like Fast Pair baked into Google Play Services are another bandaid for the most common problems, but fragmentation remains the biggest problem with Bluetooth, as only the  Google’s Pixel Buds and Libratone’s Q Adapt On-Ear support Fast Pair on Android so far.

Both Apple and Qualcomm are finding ways to plug up these problems with Bluetooth and help expand the ecosystem by producing solutions. Furthermore, the growth in smart home speakers is now demanding internet connectivity, casting support, voice keyword detection, multi-microphone input support, and noise cancellation technologies to bring consumers the functions they’re now after. This additional product complexity increases research and development costs, and so rather than reinventing the wheel, it’s more cost effective for speaker manufacturers to buy the SoC and digital electronic design from experts so that they can focus on the audio circuitry and acoustic design.

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While Apple may be in the lead when it comes to headphones, Qualcomm’s Smart Audio platform with Alexa and Assistant certification is likely to be picked up by a number of third party smart speaker manufacturers this year. Not forgetting that it’s latest Bluetooth audio chipset is promising significantly longer battery life, which could also see an uptick in adoption in the headphones space.

Apple is more aggressively trying to corner the market with solely proprietary solutions that it can control end-to-end, while Qualcomm has the more difficult job of providing a wide range of options to various companies. Having Qualcomm alone solve these issues isn’t ideal for consumers though, as this still leads to inconsistent features across products that don’t use Qualcomm’s hardware. Take the Samsung Exynos rather than Snapdragon powered Galaxy S9, for example, or Huawei’s smartphones that use the company’s own processor, or speakers that use their own app to sync up Broadcast Audio. It would be preferable for consumers if Bluetooth SIG updated its standard with better audio features and enforced these improvements on those looking to implement its future specifications.

Who will win the Bluetooth battle?

In some ways we’re looking at another Apple vs Android, or Mac vs PC, but this time for the wireless and smart headphones and speaker markets. Apple is once again providing internal solutions that look to bring consumers into its pretty walled garden. Qualcomm is fulfilling its typical role of providing various other manufacturers with the essential tools to build their own rival products and to help keep the market a vibrant and competitive place. In that sense the Qualcomm’s audio division is indispensable.

As with similar battles for PCs and smartphones, neither side is likely to be able to corner the wireless headphone or speaker markets entirely. For Apple, its iPhone and Beats brand awareness is already huge in both the mobile and headphone spaces, and its recent expansion into the smart home speaker market is only going to improve this profile as a leading audio company further. Even if Apple’s ecosystem may not have all of the best features, the “simply works” strategy isn’t going to lose its appeal.

Bluetooth headphone manufacturers looking to close the gap on Apple's lead need chipsets and development ecosystems from the likes of Qualcomm.

However, a powerful and agnostic platform taking input from multiple partners is likely able to convert this feedback into faster innovation and more flexible products that meet emerging needs. So rather than dictating what the market gets, Qualcomm’s business model is better suited to giving partners, and therefore consumers, what they want. Furthermore, Qualcomm will be powering a wider range ofproductss at various price points, ranging from cost effective headphones that undercut Apple, right up to audiophile brands that have a far better reputation than Cupertino in these markets.

Time will tell if either can pull ahead, but a safe bet will be on a heated behind-the-scenes battle between the two as they race to provide killer wireless audio features.

Qualcomm announces the Snapdragon 845 VR development kit

GDC 2018 is in full swing this week, and a number of companies have divulged new information on games and software that they’ve been working on for months. Qualcomm is one of these companies, and today announced a new Snapdragon 845 VR development kit that it says will help pave the way for more immersive standalone VR experiences.

One of the new features present in the Snapdragon 845 mobile platform is 6DoF SLAM, which stands for six degrees of freedom (6DoF) with simultaneous localization and mapping (SLAM). This gives the user the ability to freely walk around a room without being constrained to any one place and have their movement mirrored in the virtual world, which should drastically up immersion in VR experiences. While desktop-based experiences need cables and external tracking solutions to map where you move in a space, Qualcomm’s Snapdragon 845 can do that all within the SoC.

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Another major benefit of the Snapdragon 845 development platform is support for foveated rendering techniques on Qualcomm’s Adreno GPU. This renders areas you are looking at in full resolution while leaving out-of-focus areas at a lower resolution to save on rendering power and keep frame rates high. A particularly useful and important trick in products with more limited GPU horsepower. Qualcomm has partnered with Tobii to enable their EyeCore eye tracking algorithms in supported headsets, aiding more demanding games in developing smooth, realistic experiences.

The Snapdragon 845 also enables a new boundary system, which gives developers the data necessary to visualize how much space their app is going to take in the real world, and constrain the player to those boundaries. This should also help developers manage things like notifications and videos within their app, and should keep users from needing more space than is physically available to them.

Qualcomm has also announced that the company is partnering with HTC to support ViveWave, a set of API’s aiming to help create content optimized for Snapdragon hardware across OEM’s, while also helping to promote a path to full Vive-based VR gaming for potential users.

Qualcomm says its Snapdragon 845 SDK and reference HMD should be launching in the second quarter of 2018, though we don’t know the price or availability.

Stay tuned as we bring you all the latest news from GDC and beyond.

Broadcom has decided not to acquire Qualcomm

Over the course of the last few months, Broadcom has been working to acquire Qualcomm, a process that has even seen the would-be acquired company turning down an offer of $130 billion because it was considered an undervaluation.

However, a recent U.S. presidential order blocked the acquisition of Qualcomm by Broadcom, setting up the biggest possible road block in Broadcom’s plans. The company initially intended on trying to change the order, saying that it did not agree with the U.S. government’s belief that U.S. national security was at risk if the acquisition was permitted, but it was short-lived.

Today Broadcom officially announced that it is ceasing its efforts to acquire Qualcomm. In its announcement, Broadcom says it still doesn’t agree with the presidential order’s particulars, but that it will “comply with the order”.

Here’s Broadcom’ statement on the matter:

“Although we are disappointed with this outcome, Broadcom will comply with the Order. Broadcom will continue to move forward with its redomiciliation process and will hold its Special Meeting of Stockholders as planned on March 23, 2018.

Broadcom’s Board of Directors and management team sincerely appreciate the significant support we received from the Qualcomm and Broadcom stockholders throughout this process.

Broadcom thanks the independent nominees who stood for election to the Qualcomm board, not only for their time and effort but also for their unwavering commitment to act in the best interests of Qualcomm stockholders.

Broadcom appreciates the following statement from U.S. Treasury Secretary and CFIUS chair Steven Mnuchin on March 12: ‘This decision is based on the facts and national security sensitivities related to this particular transaction only and is not intended to make any other statement about Broadcom or its employees, including its thousands of hard working and highly skilled U.S. employees.’

So it looks like Qualcomm doesn’t have to concern itself with a potential acquisition anytime soon.

Why did Trump stop the Broadcom-Qualcomm deal?

  • Yesterday, President Donald Trump surprised the tech world when he put out a Presidential order prohibiting the sale of Qualcomm to rival Broadcom.
  • Trump made the move in the interest of “national security,” but it’s not clear what that means unless you know the whole story behind the Broadcom-Qualcomm deal proposal.
  • Unless significant regulatory standards are placed on companies by the government, the President will have to step in to stop deals with foreign agents more and more in the future.

Yesterday, President Donald Trump surprised the tech world when he put out a Presidential order prohibiting the sale of Qualcomm to rival Broadcom. While President Barack Obama did once step in to stop a private business deal in 2012, a sitting President intervening in private business affairs is a rare thing. Why did the President of the United States feel the need to stop one chip-maker from buying another chip-maker?


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To understand how we got to this point, you need to know some background. In November of last year, Broadcom offered about $105 billion to buyout rival Qualcomm. Qualcomm refused, citing the $105 billion number as “significantly undervaluing” its business. Broadcom responded by upping the bid to $121 billion. Qualcomm shot that one down as well and then said that $160 billion would be the number it would take seriously. If Broadcom bought Qualcomm for that much money, it would be the largest tech deal in history and the third-largest deal in business history altogether.

Once Qualcomm gave the $160 billion number, the United States government intervened. The U.S. Treasury Committee on Foreign Investment (CFIUS) sent a letter to both Broadcom and Qualcomm, which raised concerns about the merger. The letter called out two major problems: Broadcom’s reputation for research spending cuts and its business relationships with “foreign entities,” which is mostly referring to China.

CFIUS is concerned about Broadcom's business relationships with 'foreign entities.'

Yesterday, the President stepped in and stopped the deal in its tracks, even going so far as to prohibit the 15 members of Broadcom’s board from ever seeking election.

“Foreign entities”

CFIUS was established in 1975 under president Gerald Ford. Composed of members of different Federal agencies, its express intent is to monitor the national security implications of foreign investments in the United States.

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Qualcomm is an American company, headquartered in San Diego, CA. Although most of its chips are made in China, the company itself is American and must adhere to American laws. Broadcom, however, is incorporated in Singapore (with a co-headquarters in San Jose, CA), which puts it out of American jurisdiction.

Singapore is a sovereign city-state, although it is closely related to China due both to its physical proximity to China and its understanding of the powerful influence China has over the Asia-Pacific region. In other words, Singapore is not China, but it would be hard for anyone to argue that the two countries are not strong allies which depend on each other.

Trump wants Qualcomm to stay in America.

Knowing what we know about where President Trump stands when it comes to nationalist ideals (just take a look at the tariffs he is pushing into law), it would be easy to conclude that Trump nixed the Broadcom-Qualcomm deal because he wants Qualcomm to stay in America and he wants China to stay out. America good, China bad. But it’s not that simple.

We have to remember that the other aspect of CFIUS’s letter called out Broadcom’s reputation for research spending cuts. Why did the organization feel that was a big enough issue that the government needed to intervene?

Research, patents, and shareholder interests

Why does Broadcom want to buy Qualcomm, anyway? Why is one company willing to spend hundreds-of-billions of dollars to create a merger?

The answer is patents. Qualcomm has two divisions of its business: chip creation and patent licensing. The two branches create what’s called a “virtuous cycle” — one branch helps the other branch which then helps the other branch, on and on. When Qualcomm creates a new chip, it logs new patents into its portfolio. Those patents can then be licensed to other companies for massive profits, and those profits can go back into the creation of more chips.

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The chip-making side of Qualcomm is lucrative because its Snapdragon chips are used in many of the world’s best smartphones. But, however lucrative that side of Qualcomm is, the patent licensing side is more lucrative than you can imagine. Qualcomm’s patents don’t just involve SoCs; they also involve the way modern smartphones connect to mobile towers (CDMA and LTE). In other words, almost every smartphone with a CDMA or LTE mobile connection, regardless of the SoC on board, needs a paid license from Qualcomm.

As it stands, Qualcomm could stop making chips entirely and just manage its patent portfolio and still bring in billions a year.

Broadcom wants Qualcomm's huge patent portfolio, not so much its chipsets.

Broadcom knows this, and wants control of those patents. With 5G connections right around the corner, Qualcomm’s patent portfolio is set to make even more money.

But the chip-making side of the business? Broadcom is not so interested in that. With Samsung now the biggest chip-maker in the world and Apple dominating the high-end smartphone market with the iPhone (which runs on an Apple-created chip), chip-making is not going to stay lucrative for long. It doesn’t take a financial genius to see the writing on the wall: Broadcom would buy Qualcomm, and then likely either stop all research and development on new chips or even dismantle that whole arm of the business entirely. Then sit back, and watch the cash roll in.

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As one would expect, this would make shareholders in Broadcom a lot of money very quickly. Between the sales of Qualcomm’s current Snapdragon SoCs and the patents in 4G, 5G, and eventually 6G, Broadcom shareholders would see their bank accounts explode instantaneously.

But what about the long game? If a Broadcom-Qualcomm deal took place, and Broadcom stopped all research into new chipsets and only relied on patent licensing, what would it look like ten years down the road? That’s where the problems lie, and why Trump is stopping the merger.

China the only choice

It’s no secret that smartphones are a huge business. Yes, sales are starting to go down for the first time ever, but there’s still plenty of money in smartphones. But what will the future be like with 5G? What about the eventual rollout of 6G, or whatever the next step is?

Speed tests of 5G networks show that the mobile network of the future will be incredibly fast, even when accounting for real-world factors. It will be so fast, that when a true nation-wide, stable 5G network is in place, you won’t even need a regular internet connection anymore; your mobile phone will likely get as fast or faster speeds than your wired connection.

Chipsets and mobile network patents will become an even hotter commodity in the future than they are now.

If that’s the case, then chipsets and mobile network patents will become an even hotter commodity in the future than they are now. Citizens worldwide will rely heavily on chip-manufacturers to support our ever-more-connected world.

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But what if China (or some other nation aside from America) makes all the chips and controls all the patents? What if mobile technology comes from one company with interests that don’t align with the U.S.?

That’s why Trump stopped this deal. Right now, it may seem like the President is getting involved with something that he should stay out of, but a Broadcom-Qualcomm merger does, in fact, pose a national security threat. If our connected world is controlled by Singapore (and thus, closely connected with China), that’s a serious transfer of power.

What else could Trump do? It would be incredibly difficult (and against Republican/business ideals) to regulate the eventual Broadcom-Qualcomm megacompany to ensure that it doesn’t stop research and development of new chipsets. And no political party wants to be the one to step in and start an overhaul of the patent system, which financially benefits many wealthy political supporters. So the next best thing is to stop the deal, keep Qualcomm in America, and keep its virtuous cycle churning along.

The future

This is not the last time we’re going to see issues like this pop up in the technology world. As long as we have separate nations with clashing ideals, we will have Presidents stepping in to squash foreign business deals.

But that can’t happen forever. For our connected world to truly thrive with innovation and progress, we must stop seeing ourselves as different nations all competing for power over each other. We also can’t entrust the connected world to companies that only care about maximizing profits. If Broadcom had its way, it would sell the industry for top dollar, so literally 15 already ultra-wealthy people could make even more money. It’s greed and unethical business practices on a disgusting level.

This is not the last time we're going to see presidents stepping in to stop foreign business deals.

As Tim Berners-Lee, the father of the World Wide Web, said today in his open letter to commemorate the Web’s 29th birthday, “The responsibility – and sometimes burden – of making [decisions about the Web] falls on companies that have been built to maximize profit more than to maximize social good. A legal or regulatory framework that accounts for social objectives may help ease those tensions.”

The President can’t step in to stop every deal. We need more regulations over companies like Broadcom and Qualcomm that keep them invested in the people of Earth, not just the bank accounts of the .01 percent. Because, ultimately, that’s what this Presidential order is all about.

U.S. presidential order blocks Broadcom’s acquisition of Qualcomm

Broadcom has been making moves to acquire Qualcomm for quite some time, with the latter company rejecting an offer of $130 billion last year because Qualcomm said it “significantly” undervalues the company.

Since that initial rejection, rumors and expectations pegged another offer to come from Broadcom. But it looks like that won’t be happening after all. The United States President sent out an order yesterday to block any potential acquisition of Qualcomm by Broadcom. The statement reads, “The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether affected directly or indirectly, is also prohibited”.

Going further, the reasoning behind the blocked acquisition appears to be national security-related, as the statement goes on to say that there is “credible evidence” that the acquisition, if allowed, Broadcom “might take action that threatens to impair the national security of the United States”.

Broadcom, for its part, is working to get the decision changed. It is currently working to relocate its headquarters from Singapore to the United States, and its planned acquisition of Qualcomm is based on that planned move. Broadcom also informed Bloomberg that it “strongly disagrees that its proposed acquisition of Qualcomm raises any national security concerns.”

Sources: White House; Bloomberg (1); (2)