Qualcomm: The Internet Of Things Is Already A Billion Dollar Business

The emerging world of every object connected to the internet -- the "Internet of Things" -- is getting plenty of attention, but it's frustratingly opaque. For all the endless research reports and tech pundit hype machine, it's hard to see much substance.

Qualcomm provided a bit of guidance on Thursday about exactly how big this sector is for the San Diego chipmaker. At an event at San Francisco's Masonic Center, Qualcomm said it made $1 billion in revenue last year on chips used in a variety of city infrastructure projects, home appliances, cars and wearables.

Qualcomm said there were 120 million smart home devices shipped with Qualcomm chips in them last year. In addition, there are 20 million cars equipped with its chips, and  Qualcomm silicon is used in 20 types of wearable devices.Qualcomm provides everything from cellular modems and WiFi chips to application processors to Internet of Things devices.

The chipmaker's makes the most money selling the wireless chips and processors for a large chunk of the smartphone market, but it expects that 10% of its revenue in its chip division will come from non smartphone devices in 2015.

Qualcomm is using much of the same technology it puts into phones in Internet of Things devices. It's tailoring its Snapdragon processors for mobile phones, for example, for automobiles and smartwatches. “The investment we've made in the Snapdragon business is necessary to drive our mobile business,” Qualcomm president Derek Aberle said in an interview. “We've also made some investments in automotive-grade Snapdragon chips, but it's not like we have to create entirely new processors and chips. We can leverage our previous investments and come through with higher margins.”

Aberle pointed out that when the company was founded back in 1985, its first product was developing connectivity for trucks. Revenue from that business was used to fund its research into cellular modems -- the core piece of technology that Qualcomm is so well known for today.

Qualcomm is facing competition from the rest of the chipmaking world in its attempt to be a big player in this new market. On Tuesday, Samsung unveiled a new set of chips called Artik, which are also specifically intended for Internet of Things devices. Intel has an business division dedicated to the Internet of Things which brought in $2 billion in revenue for 2014, but Intel packages lots of software and cloud services into this overall revenue count. Qualcomm's $1 billion figure for 2014 sticks strictly to chip sales.

Unlike the smartphone business, the Internet of Things market is not likely to be dominated by a handful of massive players like an Apple or Samsung. Instead, it's expected to consist of smaller players competing across a variety of segments be it  connected shoes, watches, thermostats, lightbulbs or other devices.

On Thursday, Qualcomm also introduced new chips intended for Internet of Things devices: a WiFi chip with processing power built in that can connect up to the internet without the assistance of a separate processor; and another WiFi chip to power hub that can act as a central point for routing devices together. The latter chip would be ideal for a smart home hub that could connect multiple devices to each other.

Breaking ranks with its competitors and most everyone in technology, Qualcomm doesn't like to talk about the Internet of Things. It prefers to call it the "Internet of Everything."

“The term captures the concept well,” Raj Talluri, senior vice president of product management, said in an interview. “The problem is that it captures it in a way makes people think it's one club of stuff. There's a smartphone processor, but we can't talk about an Internet of Everything processor. It needs to be further refined.”