The new BREW: Think cheaper phones but bigger impact

SAN DIEGO--The renaming of Qualcomm’s (NASDAQ:QCOM) annual BREW conference to Uplinq is more than just a marketing stunt. The rebranding is a tacit acknowledgment that Qualcomm can no longer conquer the mobile application space alone and is embracing the myriad of other operating systems and application platforms it once pit BREW against. Meanwhile the rest of Qualcomm’s considerable hardware and software technology will be geared toward making those other platforms perform better, whether they’re Android, Windows or, yes, even Symbian devices.

At this year’s Uplinq, Qualcomm CEO Paul Jacobs still believes BREW has plenty of promise in mobile applications, but it’s a platform now clearly targeted at the bottom half of the market—at the myriad of inexpensive feature phones that sit right below the Android, BlackBerry and iPhone devices consuming the majority of data on operator networks. But Qualcomm isn’t scaling back BREW’s features to meet its new target. Rather its latest iteration of the solution, BREW Mobile Platform, is the first to resemble a full-fledged operating system rather than an application run-time environment. Jacobs said Qualcomm envisions creating a new category of “smartphones for the masses” that run on cheaper hardware that may not support the full feature sets of their fancier cousins, but will nonetheless make a wealth of mobile data services available to what are now just “text and talk” phones.

“In the ten years since we launched BREW, there have been a lot of changes,” Jacobs said during his Uplinq keynote address. BREW was the first application distribution platform available on many devices and it pioneered the concept of the App store, he said. But while Qualcomm’s larger vision for BREW has since been appropriated by Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG)—two names now synonymous with the app store, BREW MP now has the opportunity to fulfill that vision with the next generation of smart devices, Jacobs said. “We think the platform represents the largest developer opportunity out there in terms of scale and consumer reach,” Jacobs said.

Long before the first iPhone appeared in AT&T’s stores (NYSE:T), Qualcomm started retooling the original BREW platform in an effort to make it more relevant in a fragmented world of multiple operating systems, distribution platforms and business models. Its efforts then primarily focused on decoupling the highly vertically-integrated platform so it could sell the component parts to any and all operators—a user interface here, an app store there, or any other part in the long chain between the developer and carrier’s back end systems. But with BREW MP, Qualcomm appears to be returning to its roots. While it is keeping much of the flexibility in the platform, its ambitions again seem to lie in selling an end-to-end solution to operators, only this time its device focus has narrowed.

But Jacobs said it would be a mistake to assume that focus on lower end devices limits BREW MP’s potential market or impact. In emerging markets, few people can afford the steep investment in a smartphone or the high cost of the data plan that accompanies it. In developed markets, smartphones are scaling down—a trend Qualcomm is encouraging by producing more inexpensive mobile data radios and processors—but at certain point operators have to delineate between categories of devices, he said. If every phone is Android phone, the term smartphone becomes meaningless. Jacobs said operators have approached Qualcomm about using BREW MP in order to help create tiers of data devices in their portfolios.

“If you had asked me a few years ago about BREW, I would have seen it only in the lowest tier of devices, but there has been a lot of demand from operators,” Jacobs said. “They want a variety.”

The smartphone market proper is still in Qualcomm’s sights, but the vendor has chosen to target it with every product it offers other than BREW. In his keynote, Jacobs outlined a broad selection of technologies all designed to make smartphones smarter.

· The most impressive of those was a new augmented reality initiative Qualcomm launched today, that allows a smartphone to marry virtual objects with the real world—at least the real world as seen through the phone’s camera. Peter Marx, vice president of technology for toy maker Mattel, appeared on stage to give a demonstration of an augmented reality version of the classic children’s boxing game Rock’em Sock’em Robots. 3D rendered virtual robots were projected on the screens of two Android phones when the cameras were pointed at a game board, allowing Marx and an associate to fight it out in real space rather than merely on the entirely simulated world of screen.

· Qualcomm has directly integrated its Snapdragon process line with the kernels of most of the major operating system and has developed optimization software that will allow those OSes to perform functions much faster when running on a Qualcomm chip, Jacobs said. The integration work has been done for Android, Microsoft’s (NASDAQ:MSFT) Windows 7, the Palm (NASDAQ:PALM) WebOS, Research in Motion’s (NASDAQ:RIMM) BlackBerry. Two of the most popular platforms, Apple’s iPhone IOS4 and the Symbian OS, were not on the list but for good reason. Apple sources its silicon from vendors other than Qualcomm, and Symbian is used primarily by Nokia (NYSE:NOK), which makes a point of not buying hardware from Qualcomm. Qualcomm is also designing its own graphics processers in parallel with Snapdragon to add more multimedia and gaming kick to devices.

· Jacobs also demonstrated peer-to-peer proximity software that allows applications to link up via Bluetooth or Wi-Fi regardless of operating system or device manufacturer. The demo showed a Symbian device and an Android device playing in a multiplayer gaming session linked by Bluetooth. Jacobs said that given its unique position in developing across hardware and software platforms it was one of the only companies that could effectively bridge device in a fragmented market.