In Qualcomm's Q2 earnings for 2015, the company is decreasing its outlook for the rest of 2015 as smartphone manufacturers, especially Samsung, chose to order chips from Qualcomm rivals. Samsung's decision to drop Qualcomm chip orders were said to be the reason. However, the root cause of this reduced outlook points to Apple's previous decision to jump into a 64-bit iPhone 5s. It was unnoticed, but the ripple effect of it is now felt. This was Apple's "checkmate move" against Qualcomm and Android devices.
The company reduced its guidance for 2015 within $25-$27 billion compared to Qualcomm's previous outlook of $26.3-$28.0 billion. This resulted to Qualcomm's more than 2% lower shares in after-hours trading. Forbes cited Qualcomm CEO Steve Mollenkopf said, "While we remain confident in the significant growth opportunities ahead, we are reducing our QCT outlook for fiscal 2015, primarily due to the increased impact of customer share shifts within the premium tier and a decline in our share at a large customer."
The main cause of this reduced "QCT outlook" is Samsung's dropping orders of Qualcomm chips. But, why?
Ars Technica's Andrew Cunningham reportedly summarized it, "In short, chips throttle, but the 810 throttles more than most, and it's severe enough that the 810 is actually slower than the 801 or 805 in some CPU-bound tasks over the long haul. The Exynos 7 Octa, which has similar specs on paper, is much better in practice. At this point, Qualcomm has implied to us several times that its use of ARM Cortex CPU cores was a stopgap measure... "
A report asked why Qualcomm rushed the Snapdragon 810, which was found out to be slower, and why manufacturers are dropping Qualcomm orders. The reason was Apple.
Tim Cook's announcement of including the A7 chip in the iPhone 5s was seen to be the "key moment." When Apple pushed the iOS to 64-bit, it was the wrong time for Qualcomm because Qualcomm's new-design 64-bit chip Snapdragon 820 will not be available in devices until the first half of 2016. This resulted to manufacturers having to choose between continuing with their plans and releasing a 64-bit handsets down the years (which would be a marketing advantage to Apple), or to do what Android does best and create some "Specifications Trump" by matching the 64-bit machine with solutions that reportedly had a "hint of MacGyver about them" (which would be a technical advantage for Apple also). Thus, Apple made a "fork of grandmaster proportions for the competition to deal with."
Further, Apple's leap to 64-bit was also said to be a corporate advantage, since there were no similar alternatives for Android devices to jump as well to a 64-bit processor. Even if there were still 64-bit hardware alternatives, Android OS would not give 64-bit until Android 5.0 release.
Once the 64-bit Android OS was rolled out, the hardware has to follow also. Qualcomm then offered a "quick" 64-bit Snapdragon during these events, which was the Snapdragon 810. Though it has all the marketing benefits of a 64-bit function, its technical benefits are fewer.
Apple's A7 was faster in CPU-based performances, graphical tasks, and gave longer battery life, which was all present in the iPhone 5s. Compared to Apple, Android's situation was opposite. In the rush to match Apple, every latest Android device has to accommodate big and unexpected compromises. Apple's move did not only increase iPhone's power, it pushed Google into rushing the Android 64-bit version, forced Qualcomm to disturb its production plans, and weakened Android phones going on sale in 2015.
Qualcomm seems trying to get out of the "checkmate" as the company recently set up a unit in Shenzhen, China to offer local device makers support in marketing their devices abroad. The company was seen looking for a partnership with China's smartphone manufacturers that have faced challenges in attempting to expand outside China.
Join the Conversation