Qualcomm Inc (QCOM)

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Arch memories, Qualcomm daydreams: Playing 'what if'
Alexander Soule
Journal Staff
INDUSTRY WRAPUPS
From the November 26, 2004 print edition
Tech biz

http://www.bizjournals.com/boston/stories/2004/11/29/newscolumn1.html

It was not Cingular, and it was not Verizon Wireless -- but it was the only significant wireless provider we could call our own.


Following its merger with Metrocall Holdings, Arch Wireless is now USA Mobility, and it is no longer based in Westborough, instead listing its headquarters in Metrocall's base of Alexandria, Va.

Arch Wireless occupied the low-rent district of the wireless world -- pagers -- and in a way reflects the old, spare Massachusetts culture from which it sprang.

The Pilgrims got here first -- Arch Wireless arrived in 1986, predating the spread of mobile phones. And whereas major mobile phone carriers encourage people to yuk it up with their friends, Arch's technology necessitated keeping things short and simple -- just the way crusty Yankees like it.

But unlike other players, Arch did not evolve with the times. Chicago's Motorola has survived to become the lone U.S. company that can make a reasonable claim to status as a conglomerate in the wireless sector. Waterloo, Ontario, is home to Research in Motion, whose Blackberry messaging device Arch Wireless attempted to mimic. San Diego has Qualcomm, whose chips revolutionized the cell phone industry by creating an inexpensive way to send data.

What's left in Massachusetts? Well, we still have one of the largest wireless-tower operators in the world in American Tower Corp. We have chip makers Analog Devices Inc. in Norwood, and Woburn's Skyworks Solutions. We have radio manufacturer M/A-Com in Lowell, though it is owned by Tyco International of Bermuda.

Big names in their industries all, but names that do not carry the magical ring of Blackberry or Qualcomm.

Actually, Qualcomm represents one of those big "what ifs" locally. Founder and Chief Executive Irwin Jacobs taught at the Massachusetts Institute of Technology before heading out to the University of California San Diego. He would go on to co-found a satellite company there called Linkabit, ultimately merging it with M/A-Com.

His next startup would be Qualcomm, establishing him as an industry giant. Too bad we missed out on the Jacobs gravy train, but as the saying goes, there is always another trolley coming down the tracks.

Founded a few days after the March 2000 crash of the Nasdaq, Chelmsford-based Airvana Corp. has thrived by developing a new iteration of the CDMA technology pioneered by Qualcomm for mobile phone data transmission.

Every few months, speculation is renewed that Airvana will reward its investors and 200 employees next year with an initial public offering of stock; the same rumors surround Starent Networks in Wilmington, which was incorporated the same week as Airvana.

They may want to strike while wireless's "big iron" is hot. I recently ran into an Internet-era millionaire who confided to me that he would never launch a wireless equipment company today.

"There are no profits in it," he said. "All profits up and down the wireless chain are being squeezed out."


That is what happened to Arch Wireless, which held off intense competition in the paging industry only to run into the emergence of Blackberry and new pricing plans from cell phone carriers. A lightning bankruptcy round later, it is controlled by the Virginians.

Airvana was started in March 2000, around the time that Murali Aravamudan co-founded Winphoria Networks, which also happened to be the week the Nasdaq bear market started.

They share something in else in common -- both launched with backing from Waltham-based Matrix Partners.

Motorola spent $150 million to acquire Winphoria two years ago. Now Aravamudan has started a new company on cash fronted by Matrix, but he apparently has abandoned the wireless market. All we know for the time being is that Veveo.TV is developing some type of Internet-enabled video software.

Aravamudan may be out of wireless, but it is more important to reflect on who is in.

There are indicators that Boston may finally take its place alongside San Diego on the short list of wireless innovation -- by developing small wireless devices that send short bursts of data over short distances.

Ember Corp., Millennial Net, Radianse, ThingMagic and other local startups freely throw out terms like "revolutionary" to describe the impact of their products, and all indicate intense interest in their products.

U.S. Rep. Edward Markey, a Democrat from Malden, said last week he hopes to free up more unlicensed frequencies for such uses, saying it will spur such innovation even further.

What if the next Irwin Jacobs is among us as we speak -- er, instant message?

Alexander Soule covers emerging technologies and startups. He can be reached at [e-mail].