Qualcomm has been going through a rough patch lately, as their Snapdragon sales are reported to be significantly slowing down, which has in turn resulted in the company lowered their expectations for 2015. There are several factors affecting Qualcomm’s sales at the moment, but one of the biggest problems is that competition is catching up to the standard previously set by Qualcomm. Snapdragon processors are typically seen in most high-end devices such as the Nexus 6 with a Snapdragon 805, the HTC One M9 with a Snapdragon 810, and the recently released LG G4 with a Snapdragon 808. But Qualcomm’s dominance in the mobile chip market is beginning to tumble as one of Qualcomm’s biggest clients, Samsung, replaced the Snapdragon processor with Exynos 7420 processors in both the Galaxy S6 and Galaxy S6 Edge. This decision made by Samsung served as, Qualcomm Executive Chairman Paul Jacobs said, ‘a good wake-up call’.
Samsung opting for their in-house Exynos processor instead of Qualcomm’s own Snapdragon, greatly affected the company’s revenue. Hundreds of millions of dollars in sales were implicated in the possible deal with Samsung. This was one of the main reasons which pushed Qualcomm out of their comfort zone, since the company was beginning to slow down innovation, allowing the rest of mobile chip producers, like Intel and other less known companies based in Asia, to gain more ground and catch up with Qualcomm. The increased competition along with the issues with Samsung has noticeably, damaged Qualcomm’s stock, which since 2015’s outset, has decreased about 8 percent.
Executive Chairman at Qualcomm, Paul Jacobs, remains optimistic about the situation in which the company currently finds themselves. After LG unveiled the anticipated LG G4, Jacobs stated that “Competition is good” and that the inclusion of the Snapdragon 808 in the LG G4 was “the silver lining of what’s been going on with the Samsung situation”. All of these issues haven’t been enough to remove Qualcomm’s crown as the biggest mobile chip maker in the world but have surely caused the company to rethink its strategy. In order to keep the leading position in the mobile processor market, Qualcomm opted to aim its research and development’s budget of $5 billion per year, towards several projects that show to be more innovative and with more potential. Paul Jacobs stated the company’s goal of developing and releasing new technologies in areas that haven’t been explored yet by Qualcomm, such as robotics and virtual reality. Qualcomm’s Executive Chairman has just begun making some radical changes to the way the company operates, in order to stay on top of the competition. As Jacobs said, Qualcomm is going “to do a little gardening.” meaning the company will do what’s necessary to continue innovating.