Qualcomm's Strategy to Make Invisible Technology a Visible Brand in the AI Era

Qualcomm designs chips and telecom technology that are central to today's intelligent devices, powering billions of products across the globe. Despite this pervasive presence, most consumers rarely consider the underlying technology.

With the rapid adoption of AI, both cloud-based and within personal technology, Qualcomm anticipates numerous opportunities. However, this also presents a significant marketing dilemma: how to create a globally recognizable brand rooted in culture that people care about, especially for a product inherently designed to be invisible.

The traditional marketing model, which involved making a product, buying attention, and controlling the message, is no longer sufficient. This old world has been superseded by new approaches driven by data science, behavioral economics, and artificial intelligence.

Modern brands are now required to respond to consumers in real time. Every moment is considered an opportunity, necessitating a more dynamic and responsive marketing strategy to engage with an increasingly informed and connected consumer base.

Qualcomm's technology is deeply embedded across a wide range of everyday products. This includes health-monitoring rings, sleep-tracking watches, smart glasses, earbuds used for music and calls, and even cars, where there are often multiple Qualcomm components.

Don McGuire, Qualcomm's CMO, emphasizes the company's role as a 'great enabler.' He states that regardless of the product brand, Qualcomm's philosophy is to invent 'super cool technology' and make it available for others to build amazing things upon.

The pervasive nature of Qualcomm's technology means it facilitates productivity, creativity, and digital exploration across personal and business ecosystems, bringing more connected, smarter, and intelligent experiences to life.

Don McGuire identifies his biggest challenge as making something relevant that people cannot physically buy in a store, thereby making them care about it. This involves transforming an underlying component into something emotionally resonant for consumers.

Drawing on his five and a half years at Intel, where he ran the 'Intel Inside' playbook, McGuire is familiar with the process of making an 'ingredient' relevant. The ultimate goal is for consumers to actively seek out Qualcomm's technology first during their purchase decisions, looking beyond the external branding of a product.

Qualcomm operates with a 'mini house of brands' architecture. Don McGuire draws an analogy between Snapdragon and Qualcomm, and Xbox and Microsoft, to explain their branding strategy.

He notes that for a product user, the primary and most important brand is the product itself, such as Xbox, rather than the parent company, Microsoft. Similarly, Snapdragon is positioned as a product brand, with users primarily interacting with the Snapdragon experience.

This approach offers Snapdragon a broader opportunity due to its presence in many diverse devices. Since consumers cannot walk into a store and directly ask for a 'Snapdragon,' this strategy makes it easier to apply and evolve the technology as it develops.

When Snapdragon chips are integrated into devices, consumers perceive them as premium, which makes them willing to pay more. This perception directly contributes to Qualcomm maintaining strong and healthy average selling prices (ASPs) due to the brand's appeal.

The positive financial impact extends to Qualcomm's customers, as it signifies that brand value can drive business value. McGuire highlights the importance of this, noting that when a finance professional acknowledges that brand is not 'fluffy' but has a concrete business impact, it is 'music to his ears'.

Qualcomm's research indicates that if consumers perceive Snapdragon as premium and innovative in one device category, they will extend that preference to other categories. For instance, a consumer familiar with Snapdragon in smartphones is likely to prefer a car powered by Snapdragon.

This 'halo effect' provides Qualcomm with 'permission to exist' as it ventures into new categories. The reputation, awareness, preference, and affinity built in established segments are transferable, allowing the brand to enter new markets with a pre-existing level of trust and recognition.

Raja Rajamannar notes that marketing often fails to adequately demonstrate the value of branding to key business partners, including CEOs, CFOs, and P&L owners. This deficiency ultimately 'short-changes brands'.

Companies frequently prioritize performance marketing cycles, which are important but should not be pursued to the exclusion of branding efforts. The inability to articulate branding's concrete business impact can lead to an imbalanced focus.

Qualcomm, traditionally a B2B company, made a strategic decision to incorporate a B2C component with Snapdragon. This pivot was driven by the expansion of its product portfolio and the increasing embedment of Snapdragon into a wider array of devices.

The company realized that building brand pull, from initial awareness through to preference and affinity, could generate significant business impact. This understanding led them to go 'all in' on establishing Snapdragon as a consumer-facing brand, marking a 'hyper diversification' into numerous product categories and industries.

The field of robotics has evolved significantly, from simple one-dimensional manufacturing arms to sophisticated self-driving vacuum cleaners and even humanoids. Qualcomm's technology is highly applicable to this evolving sector.

When entering a new market like robotics, Qualcomm considers the target customers, audience, and the most applicable brand. Robotics, for instance, fits under the 'Dragon Wing' brand family, expanding Qualcomm's growing 'house of brands.' This strategy enables the company to build specific product brand architectures for new areas, such as Dragonfly for data centers, ensuring relevant storytelling for each category.

Qualcomm is actively increasing its investment in larger brand partnerships as part of a strategy to enhance brand awareness and value. The shift from a more traditional marketing mix was prompted by the recognition that previous efforts were insufficient to make Snapdragon a globally recognizable brand rooted in culture.

Don McGuire explains that two crucial areas previously missed in their marketing mix were community and partnerships. He notes that Qualcomm's technology improves or adds capabilities to products from leading brands like BMW, Louis Vuitton, and Samsung, creating natural opportunities for collaboration. Among these, the partnership with Manchester United stands out as particularly significant.

Qualcomm's partnership with Manchester United, arguably the biggest sports brand globally with 1.3 billion fans, has proven to be a phenomenal success. Having their logo on the front of the team's kit has been a significant payoff for the brand, tapping into a massive global fanbase.

This partnership is the second-largest driver of brand awareness, preference, and consideration for Qualcomm, surpassed only by direct advertising. Initially, Qualcomm anticipated a 4x to 6x return on investment (ROI) from this expenditure; however, they are currently observing an impressive 12x to 14x ROI, far exceeding expectations and demonstrating the additive value of co-marketing.

Recognizing the challenge of building a community around an invisible product, Qualcomm decided against trying to draw people to a dedicated space. Instead, they opted to engage consumers on platforms where existing conversations about their technology were already happening.

The company conducted deep dives into platforms like Reddit, Twitch, Discord, and X, finding that Snapdragon was frequently mentioned in discussions related to other brands. Qualcomm then embedded itself as a participant in these communities, offering perspectives and validation rather than acting as an authoritative entity. This organic and native approach ensures that their engagement feels authentic and not intrusive.

Qualcomm's community, known as 'Snapdragon Insiders,' comprises 22 million global members who are passionate about technology. These individuals act as influential advisors to their friends and family, providing recommendations on new PCs and other tech purchases.

McGuire expresses daily amazement at the activeness and strong opinions of this community. They actively defend the brand and demonstrate deep affinity. In return, Qualcomm engages with them directly and intently, fostering an ongoing conversation that benefits both the members and the brand, surpassing initial expectations for community success.

AI computation can occur either directly on a device (edge AI) or remotely in the cloud (cloud AI). While consumers primarily focus on getting desired answers or help from AI, the location of computation significantly impacts value propositions related to privacy, security, immediacy, and economics.

Edge AI offers enhanced privacy because data remains on the device, never leaving a user's control. It also provides superior immediacy, processing information much faster than cloud-based AI, which requires data to travel to and from servers. This low latency is critical for real-time applications, such as autonomous driving, where delays could have severe consequences.

From a consumer perspective, the operational difference might not always be immediately apparent in simple interactions, but the underlying benefits in areas like privacy and speed for critical functions make on-device processing distinctly valuable.

The economic model of AI is evolving, with an increasing focus on the 'token economy' or 'tokconomics.' Hyperscalers are making substantial capital expenditures to expand data center bandwidth for processing cloud-based AI, which incurs significant costs.

This cloud infrastructure cost will likely be passed on to individual users through usage-based 'token' models, resembling subscription services. It will become common for heavy users of cloud-based AI to receive bills for hundreds of dollars for tokens consumed, similar to cable bills.

Conversely, processing AI closer to or on the device (on-prem) is more economically valuable to the user, as it saves costs by reducing reliance on paid cloud tokens. Qualcomm, with its extensive experience in managing power and performance at the 'edge' in devices like smartphones, is well-positioned to offer efficient on-device AI solutions that benefit both AI providers and users.

In an environment where a 'trust deficit' exists and AI is becoming increasingly integrated into daily life, Qualcomm addresses consumer trust through its core commitment to openness. The company believes that innovation thrives in open environments, a principle observed across generations.

Trust issues often arise from vendor lock-in, where users are confined to specific ecosystems, or from technology that fails to scale as needs grow, leading to 'overpromised and underdelivered' experiences. Qualcomm's DNA is founded on openness and scalability to counteract these issues. The company's vision is to engineer human progress by providing technological infrastructure and platforms that enable users to be innovative, creative, and productive, welcoming all to participate.

Qualcomm has established its credibility as a top-tier chip maker while growing its 'house of brands.' However, in the rapidly advancing age of AI, merely being the 'invisible infrastructure' behind the latest technology is no longer deemed sufficient for success.

The true benchmark for Qualcomm's future success will be whether consumers actively recognize and associate the products they love with being powered by Qualcomm. This signifies a strategic transition towards greater consumer brand recognition, moving beyond its traditional role as a B2B component supplier.