What Qualcomm is doing is building a Services Business

Implications: Looking at the services businesses of Qualcomm and what you see is the development of a number of verticals.  One of which is BREW; the others are Location, Advertising, Payments, Video.  These services are aimed at helping to create Federations for particular services.  Having created these Federations Qualcomm will be able to influence the strategy of Mobile Networks which will lift the spend on Handsets that run Qualcomm silicon.

Analysis: In the days of walled gardens Qualcomm developed the BREW platform was has successfully developed a mobile data ecosystem far larger than the GSM networks in Europe have.  As we move towards an Open system the Brew model needs to change.

Nokia have developed the OVI platform in an effort to control the content strategy of Mobile Networks and the changes that Qualcomm are attempting with BREW mirror this. 

Here in Europe Brew is not as widely used as in the US.  We have a few networks who use it for vertical solutions.  TIM uses BREW for higher functionality 3D games; O2 use it for UI on its low cost own labeldevices as does 3. 

Qualcomm is aware that it takes time to develop a new technology.  The first experiences of UMTS were poor, but collaboration resulted in it becoming mass market and becoming comparable with the DSL broadband experience.  Now that the Mobile Broadband Ecosystem has been built BREW is needed to provide content and review from handsets.  Without the development of BREW you will have Mobile Networks becoming the dumb pipes that the fixed networks are.

The Fixed Internet might be able to operate on a few high end media phones but it will not be something seen on the normal users handset.  The architecture of the mobile networks is such that bottlenecks happen and will do so until the present basestations adopt the flat architecture of I-HSDP.  these facts mean that components of BREW will be needed if the operators are to deliver a differentiated service to their subscribers.

Remember that at this moment Europe is core to the development of Qualcomm as it is the leading market for WCDMA based technologies.  Qualcomm in recent years has been developing relationships with European Mobile Networks and helping them migrate to next generation networks and services.  They are supporting the Operators to deliver services to mobile users and BREW is a toll that allows some of the services needed.

But remember that Qualcomm is an IP based business are the majority of revenues comes not from services but from silicon in handsets.