Qualcomm 2012 Annual Report Download - page 15

QChat product enables one-to-one (private) and one-to-many (group) push-to-talk (PTT) calls over 3G networks. The technology also allows
over-the-air upgrades of mobile device software, management of group membership by subscribers and ad-hoc creation of chat groups.
Our QIS division has numerous current and emerging competitors for each of its products and services whose relative degree of success may
adversely impact our margins and sales volumes. Competing offerings to the Brew and Plaza products primarily include device manufacturer
application and widget stores, such as Apple’s App Store for the iPhone platform, operator-focused application and widget retailing and content
distribution products and direct-to-consumer mobile storefronts. Our QChat product competes primarily with the iDEN PTT service in the
United States; the PTT services business is nascent outside of the United States with several competing standards- and non-standards-based
technologies.
QGOV Division. QGOV provides development and other services and related products involving wireless communications technologies to
government agencies and their contractors. Based on the percentage of QGOV revenues to our total consolidated revenues, no government
agencies or their contractors are major customers.
Firethorn Division. In fiscal 2012, Firethorn began a pilot of a new product application trademarked as Pay, which is marketed on a
standalone basis to quick serve restaurants and retailers. The Pay service enables consumers to make payments to quick serve restaurants and
retailers on their mobile devices at the point of sale.
QSI Segment. QSI makes strategic investments that we believe will open new opportunities for our technologies, support the design and
introduction of new products and services for voice and data communications or possess unique capabilities or technology. Many of these
strategic investments are in early-stage companies. QSI also holds wireless spectrum. As part of our strategic investment activities, we intend to
pursue various exit strategies from each of our QSI investments at some point in the future.
Other Businesses. Nonreportable segments are comprised of display and other product and services initiatives, including:
QMT Division. QMT intends to license its next generation interferometric modulator (IMOD) display technology in the future, while
continuing to develop and directly commercialize only certain IMOD consumer-targeted mobile products. QMT’s IMOD display technology,
based on a MEMS structure combined with thin film optics, is intended to provide performance and power consumption benefits as compared to
other display technologies. As displays in all types of mobile devices trend toward higher performance, pixel density, power consumption and
outdoor viewability continue to be significant factors to overall display performance. We believe IMOD displays can provide a competitive
advantage in these areas. In fiscal 2011, we initiated construction of a manufacturing facility in Taiwan for IMOD displays with the initial phase
expected to be completed in early fiscal 2013. We are evaluating strategic options for this new manufacturing facility, which include, but are not
limited to, operating the facility in support of our commercialization efforts and/or a sale to, or joint venture with, a third party.
Additional information regarding our operating segments is provided in the notes to our consolidated financial statements in this Annual
Report in "Notes to Consolidated Financial Statements, Note 8. Segment Information."
Corporate Structure
We operate our businesses through our parent company, QUALCOMM Incorporated, and multiple direct and indirect subsidiaries. We have
developed our corporate structure in order to address various legal, regulatory, tax, contractual compliance, operations and other matters.
Effective October 1, 2012, QUALCOMM Incorporated completed a corporate reorganization in which the assets of certain of its businesses
and functions, as well as the stock of certain of its direct and indirect subsidiaries, were contributed to Qualcomm Technologies, Inc. (QTI), a
wholly-owned subsidiary of QUALCOMM Incorporated that was created for purposes of the reorganization. QTL continues to be operated by
QUALCOMM Incorporated, which continues to own the vast majority of our patent portfolio. Substantially all of our products and services
businesses, including QCT, and substantially all of our engineering, research and development functions, are now operated by QTI and its
subsidiaries. Neither QTI nor any of its subsidiaries has any right, power or authority to grant any licenses or other rights under or to any patents
owned by QUALCOMM Incorporated. The changes in our corporate structure generally formalize the way we have historically operated our
primary businesses. The changes have been implemented, among other reasons, in order to enhance our ability to quickly deliver products to our
customers and to assist our products and services businesses to fully participate in the sectors in which they operate, including in their
development, use and distribution of software received pursuant to open source software licenses, while further protecting and insulating our
valuable patent portfolio.
Research and Development
The communications industry is characterized by rapid technological change, requiring a continuous effort to enhance existing products and
develop new products and technologies. Our research and development team has a demonstrated track record of innovation in voice and data
communication technologies. Our research and development expenditures in fiscal 2012 ,
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