Qualcomm Invests in ip.access

Qualcomm Inc. (Nasdaq: QCOM) has made a strategic investment in femtocell vendor ip.access Ltd. in a move that swells the ranks of the home base station maker’s impressive investors and could signal a significant shift in the femtocell chipset market.

Qualcomm joins ip.access investors Cisco Systems Inc. (Nasdaq: CSCO), Intel Capital , Motorola Ventures , Scottish Equity Partners , Amadeus Capital Partners Ltd. , and Rothschild Gestion. The amount of Qualcomm’s investment was not disclosed. (See Cisco Invests in ip.access and Cisco, ip.access Prep Femto Combo.)

As part of Qualcomm’s European investment fund -- which has €100 million (US$157 million) to spend on early-stage companies -- the investment in ip.access is Qualcomm’s first official move into the femtocell market. (See Q'comm to Invest in Startups.)

Behind the scenes, though, Qualcomm has actually been working hard on a femtocell chipset for some time, as Unstrung reported back in January 2007. (See Qualcomm's Home Invasion.)

“Qualcomm is expected to introduce a femtocell chipset -- that’s an open secret in the industry,” says Heavy Reading senior analyst Gabriel Brown. “But exactly what the product will be is unclear.”

Back in January last year, Qualcomm’s vice president of wireless connectivity, Greg Raleigh -- who is also the former CEO of Airgo Networks Inc. , which Qualcomm acquired in December 2006 -- told Unstrung that Qualcomm was working on an integrated WiFi/cellular chipset for a “new generation of multi-megabit home base-station products.” (See Qualcomm Buys Airgo, RFMD Assets, What Price Airgo?, and Airgo Purchase Pricing (Again).)

Qualcomm was not available for comment as this article was published. But it seems the words of warning that Qualcomm CEO Paul Jacobs issued at the Mobile World Congress earlier this year about the management and interference problems that femtocells would cause in mobile operator networks did not mean that the vendor wasn’t already dabbling in the technology. (See Femto Firms Counter Interference Flak.)

The kind of chipset that Qualcomm is developing is not known, but it is likely to be for CDMA, WCDMA, or even an integrated WiFi/cellular chipset for a home gateway.

Qualcomm’s investment in ip.access is good for the femtocell maker as well as for the young femtocell industry.

”Having [Qualcomm’s] weight behind us and behind femtocells is good,” says Andy Tiller, vice president of marketing at ip.access. “It’s beginning to look like this market is about scale. We need big friends in that kind of market, and Qualcomm is one of those friends.”

Heavy Reading’s Brown notes that Qualcomm has made a good femto investment choice.

“ip.access is one of the best femtocell plays because they’re one of the few companies that has real-world experience with small base stations backhauled over IP,” says Brown, referring to the vendor’s GSM picocell business.

The femto vendor is involved in multiple operator trials worldwide, including AT&T Inc. (NYSE: T) and Vodafone Group plc (NYSE: VOD), reportedly. (See Vodafone Picks Femto Vendors and Vodafone RFP Fuels Femtocells.)

Qualcomm’s presence in the femtocell market also signals a potential upheaval in the chipset segment if the company does indeed develop its own products.

If Qualcomm does release WCDMA femtocell silicon, that would have positive and negative implications for smaller players such as picoChip Designs Ltd. , RadioFrame Networks Inc. , and Percello Ltd. , and may impact the module business of companies such as Airvana Inc. (Nasdaq: AIRV) or Ubiquisys Ltd. , according to Brown. “Qualcomm’s involvement would go a huge way to validating the concept, but it would be a formidable competitor."

— Michelle Donegan, European Editor, Unstrung