Qualcomm ends D2D deal with Iridium

Iridium Communications and Qualcomm are parting ways when it comes to their current attempts to enable satellite services in smartphones using Iridium’s satellite network.

Qualcomm's decision to end their engagement led Iridium shares to tumble more than 8% in post-market trading Thursday, to $33.98.

In January, Qualcomm and Iridium announced a partnership to bring cellular-to-satellite connectivity to Android smartphones. The direct-to-device (D2D) service was supposed to deliver two-way messaging using Iridium’s L-band spectrum for both uplink and downlink and Qualcomm’s Snapdragon technology.

On Thursday, Iridium said the companies managed to successfully develop and demonstrate the technology. However, smartphone manufacturers have not included the technology in their devices. For that reason, Qualcomm notified Iridium that it has elected to terminate the agreements, effective December 3.

"While I'm disappointed that this partnership didn't bear immediate fruit, we believe the direction of the industry is clear toward increased satellite connectivity in consumer devices," said Iridium CEO Matt Desch in a statement. "Led by Apple today, MNOs and device manufacturers still plan, over time, to provide their customers with expanded coverage and new satellite-based features, and our global coverage and regulatory certainty make us well suited to be a key player in this emerging market. User experience will be critical to their success, and we've proven that we can provide a reliable, global capability to mobile users."

Iridium said termination of the agreements with Qualcomm frees it up to directly re-engage with smartphone OEMs, other chipmakers and smartphone operating system developers that the company had been collaborating with previously.

In addition, this development doesn’t affect Iridium's financial guidance for full-year 2023, which it provided in its October 19 earnings release. The company continues to expect that it will generate about $1 billion in annual service revenue by 2030 and have the capacity to generate approximately $3 billion in shareholder returns through 2030.

Qualcomm: OEMs prefer standards-based solutions

It sounds like the problem, according to Qualcomm, has to do with standards-based solutions versus the proprietary one they were working on.

"Smartphone OEMs have indicated a preference towards standards-based solutions for satellite connectivity in mobile devices,” a Qualcomm spokesperson told Fierce. “We expect to continue to collaborate with Iridium on standards-based solutions while discontinuing efforts on the proprietary solution that was introduced earlier this year. Qualcomm continues to support NB-NTN solutions for satellite connectivity powered by Qualcomm 212S and Qualcomm 9205S modem products.”

TMF Associates analyst Tim Farrar said Iridium has emphasized in recent months that they expect revenue opportunities beyond the smartphone market to potentially take off more quickly due to the challenges associated with monetization of messaging on smartphones.

"Who bills the customer is a major issue in a fragmented Android ecosystem,” whereas Apple has control of the hardware, software and App Store – and even then they’re making the service available for free and limiting the service to emergency messaging at this stage, he said.

In the press release, Iridium said it will also be pursuing new relationships with “smart device OEMs” for existing and future service plans, so in the near term, “we may see efforts focusing around IoT devices that can roam more seamlessly from terrestrial to satellite networks than has been the case in the past,” Farrar said. “But we are not talking about iPhone-like volumes of hundreds of millions of devices sold per year.”