Rich Karlgaard: Joining me today for Talking With Tech Leaders, is Cristiano Amon, the president of Qualcomm. Now when I think of Qualcomm (QCOM), I think of it as a semiconductor company (with approx. $25 billion in sales and a $100 billion market cap). In fact, today’s guest runs the semiconductor operations for Qualcomm among his many roles. Others think of Qualcomm as a communications company, and more recently, as a 5G global leader.
Cristiano, what is Qualcomm?
Cristiano Amon: Well, it’s all of the above. We’re a creator of standards, if you will. We created the fundamental wireless technology that goes into 3G, 4G, and now 5G. We also create semiconductors to power a number of devices. So we provide wireless engines for the world, not only for the majority of smartphones, but also into connected cars and connected PCs. Most people don’t realize we also provide the chipsets that go into WiFi access points. We have the number one position in both retail and enterprise on WiFi, whether it’s in the office, or in the home. And we continue to expand to other industries – wireless technologies can go everywhere. And as you said, 5G is front and center of what we do right now. This transition to 5G is one of the biggest opportunities Qualcomm has ever had.
“Qualcomm is a creator of standards … 5G is front and center of what we do right now. This transition to 5G is one of the biggest opportunities Qualcomm has ever had.”
Rich: Pat Gelsinger, the CEO of VMware says today’s digital acceleration is the confluence of these four superpowers – Cloud/hybrid cloud, edge/sensors, artificial intelligence and 5G. Put them all together, and the global technology infrastructure is being radically reborn. What, specifically, will 5G deliver, both for consumers and for enterprise?
Cristiano: The easiest way to think about 5G is that it is the future of the Internet. It allows everything to be connected – phones, PCs, and lots of machines. Think of it as a pipeline with virtually unlimited speeds. With multi-gigabits of speed, you have unlimited capacity to connect everything to the cloud. If you think about artificial intelligence, for A.I. to happen, you need a lot of processing power in the cloud, a lot of processing power on the device, and access to a lot of data. You need 5G to access and process the data in real time.
Rich: So for example, autonomous driving needs 5G, because the car has to analyze incoming data almost instantly.
Cristiano: Absolutely. Same is true for manufacturing. If you want to connect factories across the globe with this technology, you can’t have much latency. You need 5G speed to drive manufacturing equipment. And that’s also the future of utilities, the future of the energy sector, of smart cities, of every industrial sector. Information is basically is going to be like electricity. The reason we make this comparison with electricity is today we don’t talk much about electricity use cases. You just assume the electricity will be there when you plug in. That’s how we should think about connecting to the Internet, to information in the cloud. That’s why 5G offers so much potential. The next transformation of the economy will be built on top of this 5G foundation.
“The next transformation of the economy will be built on top of this 5G foundation.”
Rich: Explain the magnitude of the leap from 4G to 5G, in terms of speed.
Cristiano: Let’s talk about consumers first. Think about watching a video on Netflix on your phone. With 5G, you’ll get the video 95% faster and watch the video at the resolution it was created. Streaming 4k video will be as easy as streaming music is today. Uploading 4k videos will be as fast as uploading songs today. On top of that, 5G has extremely low latency – about a millisecond. That means, in social media, you can create a virtual presence. You can superimpose somebody’s avatar, you can have a virtual reality, you can have a holographic interaction. In other words, you can fundamentally change how we connect to each other. You can have glasses that look like ordinary glasses, that will let you walk into a room, look at someone, and instantly learn whether you’ve met this person before. Here’s his LinkedIn page. Here she is on Instagram. So 5G will fundamentally change consumer technology.
On the enterprise side, I think the possibilities are endless. You’ll have video conversations in which you bring up data that resides in the cloud. You can bring technologists to virtual and augmented reality and solve problems in the field. That’s just scratching the surface. Think of telemedicine. If you can reduce latency to a millisecond, you can remotely control a robot and perform an operation. That’s not possible today.
Rich: The Covid economic slowdown has been an interesting experiment. It has revealed new ways of working. We’re learning what works and doesn’t in fields like medicine and education. Colleges have learned that using Zoom as a replacement for live classes is not enough. If colleges don’t quickly learn how to create a richer virtual class, they will lose tuition dollars fast. Or think about economic inequality; the Covid slowdown has made it worse. While today’s street protests arose directly from George Floyd’s death, they are fueled by economic injustice. So here is my broad brush question to you … what can 5G do to improve education, improve the access to quality medicine, and help bridge the economic opportunity divide?
Cristiano: Great question! There is no better example to talk about the economic and digital divides than education. If you look at kids in school, not everyone is having the same experience, especially if they don’t have a PC and broadband. So front and center with 5G is to connect everyone to broadband, including schools, rural areas and emerging markets. We have the ability, for example, to create a much more immersive education with very rich information and virtual reality, to classrooms and remote locations. The pandemic revealed the digital divide. It’s who has broadband and who doesn’t, who has a computer device and who doesn’t.
You also mentioned medicine. When we launched 5G in South Korea, we worked with Korea Telecom to build a 360 5G camera, that you can wear. It was designed originally as an action camera for sports like bicycling. But in China it’s being used in hospital ICUs, with first responders wearing that camera and providing 360 video using 5G to upload that video in high definition in real time to doctors.
In the UK, there’s now a 5G ambulance pilot program from British Telecom. When you take somebody to the ambulance, you have the ability to guide the first responder by using ultrasound in high definition, with a 5G connection to the doctor in the hospital. That way the first responders can actually do diagnostic triage within the ambulance. Or just think about the potential to monitor vital signs of patients who don’t need to be in the hospital.
Rich: Apple is expected to release the iPhone 12, its first 5G phone, enabled by Qualcomm technology, later this year. I know you can’t comment on the details. But generally, why will 5G phones be a big deal?
Cristiano: We see a 5G phone as part of a 5G ecosystem that includes networks. Most people today who can buy a flagship or a high-tier phone will get it with 5G. Most are living and working in 5G network coverage area, or will within two years. What we see right now is a very fast transition of the device ecosystem to 5G. I think China is probably moving faster. In May, 50% of all phones that went into the channel in China were 5G.
The next step is to make 5G devices affordable for all tiers. Our six series 5G chipset will be affordable for over 2 billion smartphones.
Rich: You mean sub-$100 smartphones that are more the norm in emerging markets?
Cristiano: Yes. And as we keep going down the volume/price curve, 5G chipsets will be affordable for sensors and IoT devices.
But to answer your question about what a 5G phone in a 5G network can do, well, video will be a whole different experience. It will be as easy as stream music today. And you’ll have artificial intelligence capabilities on your phone for many new use cases.
Rich: Let’s talk about the pace of 5G rollout – in the U.S., China and around the world. Policymakers have have bought into the idea that rapid 5G rollout is critical for future economic health. Are they right? And are policymakers helping or hurting?
Cristiano: Very good question. So I’ll give you the global data and then I’ll come back to the U.S. So right now we have about 60 operators worldwide that have launched 5G service and are building coverage. There are 320 operators that are getting ready to launch. We expect to see 120 deploy millimeter wave technology and 5G by the end of 2020. So 5G will be effectively launched in all developed economies by the end of the year. And yes, I think among policymakers there is a broad understanding now that not having 5G would lead to an uncompetitive economy as we go to the next transition of the digital economy that relies on three elements – 5G, artificial intelligence and cloud.
Rich: And the U.S. rollout?
Cristiano: I think the U.S. is truly doing great. One positive of the pandemic is that there isn’t as much traffic on streets right now. It’s easier to build infrastructure when there’s not a lot of people in the streets. Some of the 5G operators are one quarter ahead of schedule. You already see different metropolitan areas now with 5G service. The U.S. is deploying 5G in all bands. Then there’s this technology coming that we will see deploying throughout the rest of the year. It’s called dynamic spectrum sharing. Not to get too technical, but this technology will allow the existing spectrum in the frequencies that we use today for 4G to convert to 5G – two systems coexisting at the same spectrum. That will significantly increase coverage. So when that capability comes in, if you have 4G coverage, you’re very likely going to see 5G coverage. So we expect to see a lot of progress in the U.S. 5G rollout in the second half of 2020.
“Among policymakers there is a broad understanding now that not having 5G would lead to an uncompetitive economy, as we go to the next transition of the digital economy that relies on three elements – 5G, artificial intelligence and cloud.”
Rich: Why is 5G rapid rollout so critical to a country’s economic standing?
Cristiano: Most people don’t realize this. The U.S. was the first country to build a nationwide 4G network – Verizon Wireless – and because of that, new IT companies and business models appeared. Companies like Instagram, Uber, and in many others companies. They appeared in the U.S. because of 4G.
So now the understanding is if that happened because of 4G, think about what can happen when 5G connects everything in every industry. Not having 5G could represent having an uncompetitive economy. But I’m optimistic. We’re now seeing a much higher sense of policymaker understanding in a drive towards making it happen, you know, globally, and that’s what we’re seeing right now.
Rich: And you’re comfortable that policymakers in the U.S. get that?
Cristiano: The United States has done a great job. Contrast that to Europe, where some countries in Europe did not offer the opportunity to license spectrum. Then they got caught with a pandemic and now 5G is probably not going to happen until 2021. So the U.S. has a good policy on spectrum licensing and a lot of good momentum in technology infrastructure. There’s still work to do to facilitate the buildout of cell sites. One key thing to making a successful 5G rollout is that you must have a more dense network. So you need more radios, and the carriers still have to negotiate this municipality by municipality to get the site permits. That’s what is slowing down the speed of the rollout in the United States versus China. But I think there’s a lot of good action by the FCC to facilitate the carriers as they build infrastructure. And, you know, we’re looking forward to have a lot of metropolitan areas with 5G coverage as we get to the end of the calendar year.
Rich: Of course, the U.S. is such a large geographic country, and it has a lot of small and medium sized cities, too. I was born and raised in a small city in a small state myself – Bismarck, North Dakota. If you live in a city of 50,000, or 100,000 and you’re not close to a big metropolitan area, are you months or years behind in 5G rollout?
Cristiano: The true answer depends on the carrier. But I’ll give you a broad answer to the question. It’s no different than what happened to 3G and 4G. You start providing coverage in the in the densely populated areas. And then you start moving to the suburban areas and then into smaller cities. That’s how you’ll get to a nationwide coverage. And I think that’s going to happen. You know, it’s probably realistic to predict that by 2021. You will see nationwide coverage in the United States with 5G and we’re seeing a transition faster than we saw with 4G.
Rich: What about rural areas – which have traditionally been on the wrong side of the digital divide?
Cristiano: With 5G, unlike 3G or 4G, the carriers they have a tool to actually bring high speed to the rural areas they have not been connected. And you see a lot of the carriers talking about that. That’s going to make a difference.For the first time, smaller areas will truly have broadband with gigabit speeds, low latency, all the capabilities of 5G. It’s going to be a great equalizer.
“With 5G cars, the entire digital cockpit experience will facilitate autonomy and new safety features. We’ll see a new generation of manufacturing robots and remote surgery using this technology. We’re in just the beginning of a new 5G-enabled economy. And that’s just looking at existing use cases. But the reality is, most of the use cases are not yet invented.”
Rich: Okay, well, let me ask you a final question here. It’s five years from now. What does industry and life look like in the U.S. as a result of 5G? And where will Qualcomm be? For instance, if the last remaining barrier to autonomous cars is latency reduction to a millisecond, so that machine learning can occur in real time, then 5G is the essential catalyst for autonomous driving. What other industries will be totally transformed?
Cristiano: I’ll start by answering the Qualcomm question. When we found ourselves at the beginning of this 5G transition, we said it represented one of the greatest opportunities in the history of Qualcomm. There’s no doubt that 5G is one of the largest growth opportunities for us. And that’s because 5G expands use of this wireless technology into many other industries. We didn’t used to be known as an automotive supplier. Now we are one of the main suppliers of technologies for the automotive industry, from the digital cockpit to the connected car. We were not a major industrial supplier. Now we are a supplier of key technologies to all the largest industrial corporations in Germany, the U.S., Japan and China. That will continue to expand.
Rich: One reason why investors love Qualcomm is that you know how to leverage your expertise from core industries like mobile phones into new industries like automotive and medicine.
Cristiano: Yes. We’ve learned where and how we can reuse technology for different uses. To answer your question about Qualcomm five years from now, in addition to a big mature mobile phone and PC device market, I think you’ll see a big market for smart glasses for augmented reality and virtual reality. With 5G cars, the entire digital cockpit experience will facilitate autonomy and new safety features. We’ll see a new generation of manufacturing robots and remote surgery using this technology. We’re in just the beginning of a new 5G-enabled economy. And that’s just looking at existing use cases. But the reality is, most of the use cases not yet invented. It was only 15 years ago that people were holding on to their BlackBerry and sending messages to each other saying who needs megabits-per-second speed on the phone and look where we are right now. So I think the opportunities for 5G will surprise us.
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