Qualcomm (NSDQ: QCOM) is becoming a major software supplier in mobile for mid-range devices in the U.S., but rather than make money on the platform, it hopes to sell more phones with its chipsets inside.
Up until now, Verizon Wireless was the largest customer of Qualcomm’s Brew Mobile platform, but at CES this week, AT&T (NYSE: T) committed to it for all of its mid-range devices starting by the second half of year, and Sprint (NYSE: S) confirmed to mocoNews that it was also planning to use it. Sprint’s President Steve Elfman: “I am comfortable with it becoming a standard…We’ll definitely be using Brew Mobile platform.”
By having the three largest carriers in the U.S. using the platform, Qualcomm becomes a significant middleman in the delivery of applications and other mobile content. If developers didn’t consider building their applications on Brew before, they most likely will now. The platform is free to carriers, developers and the handset makers; Qualcomm will make money by selling chipsets inside the phone. But that wasn’t always Qualcomm’s business model. Previously, Qualcomm charged everyone in the Brew ecosystem, including developers, who had to have their applications certified. Qualcomm’s CEO Paul Jacobs said during AT&T’s keynote: “It’s an open platform now. It’s free to OEMs and operators. This is as open of a platform we know how to make.”
As part of AT&T’s announcement, it said that Pantech, LG (SEO: 066570) and Samsung have committed to using the Brew platform. HTC was also named, despite the company only previously making smartphones using the Windows Mobile and Google (NSDQ: GOOG) Android platforms. By adding Brew, HTC opens itself up to a much bigger market that includes lower cost phones. HTC said its Brew phones will carry the name “HTC Smart,” and will come with its Sense user-interface overlay that’s found on some of its Windows Mobile and Android devices. Generally speaking, these mid-range devices are fairly functional, and commonly have full Qwerty keyboards or touchscreens and have access to email and a browser. But typically, they have cheaper hardware components and are given away for free. Subscribers may not have to pay for an unlimited data plan either, like you do on the iPhone and other devices. AT&T calls the category “quick messaging” and said by the end of 2011, 90 percent will be running Brew.
One of the potential outcomes of both AT&T and Sprint choosing Brew will be less fragmentation in mobile—or at least that’s AT&T’s hope. Currently, mid-range devices run a plethora of systems, from Java to Flash and to homegrown proprietary ones built by handset makers. The idea is for all Brew applications in existence today to be able to work across a larger footprint. Qualcomm’s Jacobs: “It’s backwards compatible to other Brew apps, and supports Java and Flash.”
As part of adopting Qualcomm’s Brew platform, AT&T said it will launch a new app store called AppCenter. AT&T said developers will be able to keep 70 percent of the revenues and AT&T will take 30 percent, which is the same formula Apple (NSDQ: AAPL) uses. John Zehr, the SVP and GM of mobile, said he was very excited about the announcement. “With all the fragmentation going on, it will make it easier. We are encouraged by it,” he said. ESPN (NYSE: DIS) already has a number of applications built on the Brew platform with the help of UIEvolution, a mobile-application shop.
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