Effective businesses outsource various functions to other specialized firms. These companies typically focus on providing one class of services cheaper and often of higher quality. Mr Tan was smart enough to realize that innovation and R&D can be outsourced too. He does it by buying companies that have already made huge commitments to development. He keeps the IP, chip designs, code and a few key people. Facilities and other high cost - low return items are sold. He knows exactly what he is getting and doesn’t have to wait and see. Doesn’t have to deal with development problems, crabby smart people, sliding schedules, etc. There will always be small startups with amazing ideas working themselves to death to see their dream become reality. Smart man.
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From what I understand, most big Silicon Valley companies rely on startups for innovation. Nothing gets done there because you have people with excellent academic knowledge but have no idea about how to get real work done. People are over qualified there. You have PhDs chasing hard to reproduce bugs. Therefore, you get crabby smart people. Nothing gets done there. The 20/80 rule applies there, too. Hock Tan sees this. He knows he can't rely on full time employees to get work done and therefore relies on startups for innovation.
This is actually what I encountered when I came here: people with degrees from good schools but arguing over small issues in code reviews and getting nothing done. Things that should take a few weeks take months and months.
Western companies are generally bad at managing product lines that have already seen their best days. Wall Street values companies that primarily deliver growth or nice dividends. One time honored way to deliver growth is to acquire and cut costs to the bone. Eventually, the acquiring company gets too big and transitions to dividends. Once revenue is not able to support both dividends and required reinvestment, the company starts selling and spinning off divisions.
Hok Tan is in the acquire and cut phase. His previous acquisitions were all technologically mature and in declining businesses. The shareholders were quite happy to sell since the salad days for their stock was long gone. Cell phones are still a healthy business. QCOM shareholders know their is plenty of money still to be made and are not going to sell cheap.
Most patents of qualcomm are junks worth nothing
Under HT leadership, do "VPs of technology" have any role? Are VPs with ZERO reports needed?
I think Broadcom invests for R&D in a business it is in. For example, they will support new WiFi standards, or that business will disappear.
Qualcomm R&D is just rest and vest central.
The wireless patent monopoly of QCOM leads to fine across the board outside of US. One day the SEC fine will carve out major chunk of it's profit. BRCM have the strength of patents in WiFi and other unlicensed spectrum.
OP - all the big tech companies do that. What AVGO is doing is cobbling together a massive company through financial leverage. QCOM will be their first failure as they overshot.
Trump on it's way with Hock for hostile bid of QCOM by BRCM to make it the most successful engg company in few months. And that is the end of wrestling setting of QCOM.
Well said. The deconstruction begun?
That’s what it was in the beginning. That startup creativity just doesn’t seem to scale. The days of BIG R&D dominating innovation are about over.
Are you trying to call Qualcomm a „small startup with amazing ideas“?