Qualcomm Inc (QCOM)

[Mindy]

Qualcomm's Brew answers doubters

http://www.signonsandiego.com/news/business/20040609-9999-1b9brew.html


Small developers find technology a boon to them
By Jennifer Davies
UNION-TRIBUNE STAFF WRITER
June 9, 2004



JOHN GIBBINS / Union-Tribune
Sarah Morehead of Alltel Communications watched a demonstration of a mail application by Andrew Baldocchi of FunMail, one of many developers that use Qualcomm's Brew platform.

Brew, Qualcomm's wireless application technology, has long played the role of underdog.

As soon as the technology was announced in January 2001, naysayers proclaimed that Brew, which allows cell phone users to download applications like ring tones and games, would have a tough time making a dent in the wireless industry.

Critics said Brew was a niche technology because it only worked on phones using San Diego-based Qualcomm's wireless technology and its cell phone chips. Only about 25 percent of all cell phones are based on the company's wireless technology standard, called CDMA for code division multiple access.

Industry analysts also predicted that Brew would face serious competition from Sun Microsystems' Java wireless platform, which already had a larger subscriber base.

So far, Brew has proved the doubters wrong.

That sentiment was evident at the fourth annual Brew Developer Conference, which began yesterday at the Sheraton San Diego Hotel and Marina on Harbor Island and attracted a sellout crowd. The technology is now available in 21 countries through 30 wireless companies; just last year only 7 operators offered Brew service in six countries.

According to Qualcomm, there have been more than 130 million downloads of Brew applications worldwide since the technology was introduced. That's up from 28 million in April 2003.

Michael King, a San Diego wireless analyst for Gartner Group, a market research firm, said Brew has silenced its critics.

"Before, it was always, 'Is this going to work? Is this going to happen?' " he said. "Those questions aren't being asked any more."

Paul Jacobs, president of Qualcomm's Wireless Internet Group and Brew's chief backer, said the proof of the technology's merit was in the numerous success stories of small start-ups.

"Talk to the developers and they'll tell you," he said.

A number of developers in attendance agreed that Brew has allowed them to crack the growing wireless data market.

Craig Holland, president of Thumbworks, a small Tustin-based game developer, said two-thirds of his company's revenue comes from selling Brew downloads. Thumbworks also offers Java versions of its 12 applications including Etch-a-Sketch and a School of Rock video game, but Brew versions sell much quicker.

The reason for Brew's advantage, Holland said, is that it has a built-in certification and billing system. The way the so-called Brew ecosystem works is that developers create an application and submit it to Qualcomm, which then certifies it and makes it available to the various wireless carriers.

Qualcomm acts as the wholesaler and the wireless carrier is the retailer. When a consumer downloads an application, the developer, Qualcomm and wireless phone company share the revenue.



JOHN GIBBINS / Union-Tribune
Baldocchi showed the "FunMail" application on a cell phone at Qualcomm's Brew conference.

That system makes it easier for small developers like Thumbworks to write an application and make it available to a number of different wireless carriers, including Verizon, the largest U.S. cell phone company with some 40 million subscribers.

"Java is just a programming language. You have to go through working with each different carrier," he said. "With Brew, the majority of the carriers work through the distribution system."

Because of those differences, Holland said, it is hard to draw a fair comparison between Brew and Java.

"You are not really comparing apples to apples," he said.

Isaac Babbs, CEO and founder of Atlas Mobile, a San Jose wireless game developer, said he decided to concentrate on writing Brew applications first because it was easier and a quicker way to make money. The company has seven multiplayer games available, including Hold 'em Poker+ for Prizes.

"We thought that Brew would help us capture market share the fastest," Babbs said.

One of the reasons developers are attracted to Brew is the fact that Verizon Wireless, with its 40 million subscribers, offers its applications under the Get It Now moniker.

For its part, Verizon called the Get It Now service an "unmitigated success" with more than 70 million downloads since it was launched nationally in September 2002. Verizon said it now has 520 Brew applications compared to just 115 at this time last year.

Jacobs said Qualcomm has worked hard to open up other markets and ensure that the applications work in different countries, like Japan and China.

"We built this global electronic marketplace so three guys in a garage can get someone in Country X to pay them," he said.