The Asia Series: 60 minutes with Qualcomm's Man in South East Asia

Toward the end of my week in Hong Kong, I sat down with Qualcomm’s man in South East Asia, John Stefanac.

Qualcomm needs little in the way of introduction: Billion dollar mobile industry behemoth with interests extending from mobile network technology (CDMA — that’s them), the Brew mobile operating system to m-Healthcare (yes, they’ve now developed mini wireless-enabled pills for you to swallow) and, of course Android. Virtually any Android (and now Windows Phone) device you’d care to mention is sporting a Qualcomm-designed SnapDragon chipset.

Who is John? Well let’s start with the official job title: President of South East Asia/Pacific. He’s responsible for Qualcomm’s strategy across the region taking in a diverse selection of countries from Australia to Indonesia to New Zealand, Malaysia, Philippines, Singapore, Thailand and Vietnam. Which is why the chap lives in two cities. Seriously. He’s got a place in Singapore and a place in Hong Kong. And when he’s not there, the chances are he’s on a plane to see a client somewhere in the area.

“Such as?” I ask, with a reasonably open mind. Just who does Qualcomm work with in the region?

It’s only as he starts reeling off the names of some of their partners, I start to recognise just how much Qualcomm is focused on overseas operations. Who knew that two thirds of the company’s revenues come from international markets? (That’s $12.1 billion in international revenue vs $6.3 billion domestic revenues, 2010) And Asia is one of Qualcomm’s growing markets.

In terms of statistics, I’m staggered to recognise just how many mobile devices Qualcomm is involved with. In 2009, almost half a billion CDMA devices were sold. The company estimates that figure will top 0.65 billion devices by the end of 2010. In terms of Asia, last year, Qualcomm had a hand in 91 million CDMA device shipments back in 2009, rising to 124 million this year. And the company expects its licensees to rake in a phenomenal $105.7 billion in device sales in 2010 alone.

It doesn’t take long sitting with a Qualcomm executive before you get used to lots of large numbers flying around.

Back to John. He’s warm, friendly, entirely welcoming and hugely passionate about the mobile industry. Originally from Australia, he’s done his time in the wireless industry — most recently supervising the Asian region for Nokia Siemens Networks prior to joining Qualcomm.

“What’s the market like?” I ask.

John pauses for a brief moment before bursting with enthusiasm, “This is an area of enormous diversity,” he says, spreading his arms wide, “Take Australia and Singapore,” he says, gesturing toward them, “They’re the 3rd and 4th largest 3G markets on the globe, whereas Thailand — one of our key countries, has very, very low 3G penetration right now.”

“That’s quite a contrast,” I offer, scribbling away.

John smiles and continues, “Look at Singapore — there’s something like 80% PC penetration there, compared with less than 5% in Indonesia. It’s such a diverse region, but the all share a common similarity: The need to be connected.”

How is that need manifesting itself?

“We’re seeing not just a need, but a desire to be connected all the time. So for example, just as in more developed markets, data dongle sales went through the roof, there’s a higher and higher take up of these types of services in this region — especially in markets with poor fixed line connectivity.”

I’m leaning forward, trying to write notes as fast as possible.

“It’s a very different driver in most of the markets here in South East Asia,” he explains. “In more developed markets, we might find it simply convenient to be connected, whereas here there’s a real need. A business need, a commercial need.”

What about CDMA, I ask — that’s big here, right?

John nods, “Yes, there’s 53 operators in this region — 20 of them are CDMA. So 40% of the market, roughly, is CDMA.”

Geez, I didn’t know it was that big.

“Yes, it’s huge. And we’ve got quite a few world firsts here — for instance the first CDMA EVDO Rev B network was installed and launched in Indonesia recently.”

(PT Smart Telecom, in case you were wondering)

I start to cringe internally, thinking of the slightly decrepit mobile technology we’ve got here in the UK. Or the non-existent AT&T signal in New York I experienced earlier on in the year that I managed to augment with a Verizon Wireless (CDMA) MiFi unit.

“We’re seeing big CDMA expansions in Vietnam, a new CMDA operator in Malasyia. We’re seeing a big migration from 2G to 3G in this reigon.”

Wait, I say, Vietnam?

“Yes — it’s a very young country. And just because you’re in an emerging market,” explains John, “It doesn’t mean you have less desire for a smartphone.”

I nod, scribbling vigorously. John continues, “Your need to be connected is still valid. Indeed you often have a higher need than someone in a developed market with lots of other connectivity options.”

John notes my eyebrows dancing away, reacting to what he’s saying.

“70% of Indonesia’s internet traffic is generated by mobile handsets.”

You what? I top scribbling and look up. Seventy?

“Yes, that’s from mobile handsets, not via dongles. Almost two thirds of the country’s internet traffic is generated by people using mobile phones. The networks have to keep up with this demand and they have to move fast.”

I can’t begin to wonder just how Telefonica’s o2 UK would manage with that kind of usage metric.

“If you look at the Asian culture,” John explains, “People are shy. Non intrusive forms of communications work really well, hence, for example, the super growth in the popularity of SMS.”

“But what we’re seeing with SMS is this demand is now migrating to instant messaging — or wider social network use such as Facebook.”

I nod away as John points out that Indonesia has the 2nd largest Facebook population on the planet (#3 is the UK with 28.9 million). Indonesia boasts a shocking 31.7 million users — a 21% increase in the last 6 months. With 583 million users in total, the wider Asian region accounts for about a quarter of this (126 million users).   The Philippines has 19 million Facebook users, while India has over 17 million. Malaysia has 9m, Taiwan 8m and Thailand has 6.7m users.

“A large majority of those users will be accessing via their mobile device so we’re working hard to increase the roll-out of 3G across the market.”

I nod again, scribbling.

John continues. “The increasing demand for smartphones is opening new entry points for a lot of players, Android popularity is increasing throughout the region.”

How about Brew or Brew MP?

John leans forward to explain that Brew MP (“Mobile Platform”) enabled devices are addressing economic segments that are perhaps even lower than what Android and Windows Phone 7 target.

Really, I ask?

“Yes — don’t make the mistake of assuming that people don’t want or need access to smartphone devices, especially in developing markets with growing economies. We’re seeing huge take-up on more affordable smartphones — and we’re working hard enabling connectivity for markets that have been previously underserved.”

Is it all about ‘phones’, John? What about tablets?

“Ah hah,” says John, “One moment.” He pops out of the office for a few moments leaving me and Adrian (the PR chap), staring at each other briefly. “Qualcomm are doing tablets?” I ask him. He nods silently as John arrives back.

“Have a look at this,” he says, plonking a 7″ Android tablet down in front of me. It’s still in its packaging. I don’t recognise the brand. But I do recognise the ‘Powered by Qualcomm’ logo prominently positioned on the bottom right of the box.

“Powered by Qualcomm?” I prompt.

“Yes, this is something new we’ve been doing recently,” John explains as I look over the tablet specifications. Not bad at all.

“Fundamentally our business is about stimulating 3G demand and 2G to 3G growth. In this case,” he taps the tablet box, “it’s about creating the pull.”

I’ve seen Qualcomm’s brand mentioned in the West in connection with chipsets and Android, I prompt.

“Right, well here in South East Asia we’re increasing our brand awareness. ‘Powered by Qualcomm’ is just one example. It’s helping localised brands such as original equipment manufacturers (“OEMS”) compete in the marketplace.”

“We’re seeing some Tier 1 operator brands and OEMs introducing the ‘powered by Qualcomm’ logo into the marketing mix. In many cases, the companies who were selling 2G devices last year are now selling 3G phones — and they need a good way to differentiate to the consumer.”

It certainly works on me. John hands me some marketing materials — flyers showing off the “BlueBerry Knight W8000” offered by mobile operator, CSL 3G. It’s hugely similar to a BlackBerry and could even be mistaken for one of Nokia’s C3s. As well as the Camera and ‘MP3/MP4’ functions, the e-Buddy and Facebook logos are also well defined, clearly intended as major selling points. Just to the bottom right of the flyer, there’s plenty of space for the ‘powered by Qualcomm’ logo. Just like an ‘Intel inside’ marque. It really does lend an air of quality to the product, right John?

“Yes, we’re helping the local brands [local operators/OEMs] catch and retain consumer attention. The local brands create a pull from the regional OEMs and then from the point of view of the chipset, the decision is already made: It’s Qualcomm.”

I’m still scribbling furiously so John leaves me time to finish. And in typical British fashion, I have to keep apologising every so often.

“Now then John,” I say as the end of the meeting approaches, “I’ve got a few final questions for you.”

If you’re a regular reader of Mobile Industry Review, you’ll know these are the questions I always put to senior executives in the industry. Although on the face of it, they’re a seemingly innocent set of easy questions, they’re a great method of separating the fakers from the hardcore wireless believers. Is John a hardcore player?

What was your first phone, John?

“My first phone?” he says, sitting back, hand grasping his chin, “Now let me see.”

Adrian, the PR chap, turns to me — I hadn’t warned him about this line of questioning. I’ve caught out many a senior chap from some global players who claim to have worked in mobile for decades yet declare their first handset a Nokia N95 — or worse, a first generation iPhone. That’s not longevity, is it?

“My first proper phone? Motorola StarTac — I loved that form factor.”

Good man. I was a real fan of it too — but my heart sank — was that really his first device? For someone with a long history in the mobile industry, the StarTac is rather modern. I shouldn’t have worried…

“But my first ever phone… that was some analog phone on Telecom Australia [now Telstra]!”

Excellent. He’s a proper hardcore wireless guy. Anyone whose answer includes the phrase ‘some analog’ is hardcore.

What about your current mobile device strategy? What do you use?

“Oh I’ve changed a little recently. I used to be a huge, huge pop-out keyboard device user for a good few years. Touchscreen keyboards were too experimental for me,” John explains. Me too.

“But I’ve recently swapped to the HTC Desire and I also use the Google Nexus 1.”

Kudos. What about tablets?

“Well I’m also an iPad user and I’m very keen on seeing the new generation of Android devices coming this way soon.”

And finally then John, what about applications? Which ones do you use? This, by the way, is yet another gold-standard question — most executives who don’t actually use the technology beyond calling people are completely stumped by this one. Not John. I have to scribble furiously to keep up with the list — even Adrian is impressed.

“I’m a big Angry Birds fan, I have to admit it. But I’ve also been enjoying Cut The Rope, have you tried that?”

I explain I’ve only got past a few of the elementary levels as John is then on to discussing the recent Angry Birds Halloween version, “Such a great marketing technique, I bought the Halloween version and now it’s converted into ‘Angry Birds Season’ so I’ve just got the Christmas version downloaded. Brilliant!”

As I look up from my notes, John continues, “I also make a lot of use of LogMeIn Ignition. I’ve two PCs back in Singapore so using the iPad to control them is very useful indeed.”

Anything you don’t like, John?

“Facebook on the iPad. It’s awful.”

The man speaks the truth.