Nearly 20 years ago, Qualcomm Incorporated’s founder, Irwin Jacobs, made one hell of a bet. Jacobs believed that a technique invented for guiding torpedoes during World War II — a highly complex but efficient way of directing traffic in the airwaves — would someday become the basis for a worldwide standard in digital wireless communication. It was a risky bet. Most of the major wireless carriers had committed to a different technology. The system championed by Jacobs was widely seen as too complicated and commercially unworkable. But Jacobs, a former professor of electrical engineering at the Massachusetts Institute of Technology, wouldn’t let the idea die. As Qualcomm developed and patented wireless technology, Jacobs campaigned for the system he favored, known as code division multiple access (CDMA). Slowly, the rest of the world bought in. By the late 1990s, it had become the fastest-growing global wireless standard.
As Qualcomm pushed for CDMA, Jacobs made an equally fateful decision about how his company would make money. Instead of manufacturing its own cell phones, Qualcomm would license the patents it had stockpiled. Phone makers like Samsung Group, Ericsson and Motorola, Inc., would have to forge licensing deals with Qualcomm in order to produce phones that operated with CDMA technology.
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