It doesn’t come as a major surprise, but Qualcomm has dumped its Qualcomm Life subsidiary, selling it off to Francisco Partners for an undisclosed sum. Like IBM, Qualcomm seems to have struggled to realize the potential of the healthcare sector – a fertile land that promised huge profits to those technology firms that could take root.
IBM ran into trouble when it transpired that Watson wasn’t meeting expectations, and Qualcomm seems to have decided that its wearable and wireless outlook doesn’t have much scope here. The terms of the sale to the private equity firm have not been disclosed, and Qualcomm hasn’t given detail on how the wing grew.
Founded in 2011, Qualcomm Life was given $100mn to ‘accelerate wireless health services and technology adoption.’ There is not an indication of staff or revenue, nor does Qualcomm talk much about Life inside its own filings. Francisco has changed the brand to Capsule Technologies, and will look to build upon the foundation that Qualcomm had established.
In the announcement, Francisco Partners said that Capsule will be running the information systems of 2,000 hospitals in 40 countries. A fairly extensive set of licensing partnerships meant that Qualcomm Life was able to offer a bundled offering of the software and back-end services needed to run modern hospitals and advanced care packages, and this might have been the impetus that prompted Qualcomm to ditch Capsule.
Qualcomm itself is a design-house that is integral to smartphones. It has a small side-hussle in wearables, and has been looking for devices into which to expand. These have mostly focused on gateways and network-edge servers, drones, advanced and analytical cameras, and PCs.
Notably, Qualcomm has also sold its Halo wireless charging assets to WiTricity, a firm that is looking at providing charging systems for cars. After Qualcomm failed to acquire NXP, a company with a lot of strength in the automotive semiconductor realm, the Halo assets made a lot less sense to keep on the books. Again, no price was given for that sale, and it comes after Qualcomm has cut around 2,500 staff over the past year.
So ditching divisions that don’t have big upsides seems like a rational move, but it’s one that is a little disappointing from an IoT perspective. Qualcomm had a lot of very powerful channels to exploit in healthcare, which could have been avenues to boost its core chip business. As neither sale has cropped up in SEC filings, the impact to Qualcomm’s finances are not going to be notable.
This isn’t to say that Qualcomm Life was a failure though. By most accounts, it built one of the largest connected health ecosystems, with around a thousand device integrations and over 50 Electronic Medical Record (EMR) and enterprise systems. As of August, Qualcomm Life monitored nearly 5mn patients globally, across 2,000 hospitals, according to an interview with its President Rick Valencia in MedTech Strategist. Valencia is staying on, to help with the transition, but is no longer the president.
In that interview, Valencia outlined how digital healthcare was moving forward, and the necessary reimbursement for such services was now actually a reality after a long period of slow progress. He warned that a number of challenges remain, particularly in the tension between the emerging value-based care trend and the challenges of caring for chronic long-term issues.
Valencia added that “early on, we believed that we would move much more rapidly toward a value-based healthcare environment where doctors would be paid for the outcomes that they were generating rather than the volume of services delivered. Without finding a mechanism to properly incentivize doctors to more continuously manage their patients, number one they’re not going to do it, and number two, we’re going to continue to have the problem of out-of-control healthcare costs, especially for those who most need continuous monitoring: chronic disease patients.”
Of course, Valencia believes Qualcomm Life was going to power that transition, and that in future, it would be running all the data that its platform was collecting through AI-powered algorithms. “We are at a point where we are beginning to have data-driven medicine solutions in the hospital. We are seeing a lot of interest in the buying cycle, and are doing our first early deployments right now. Hospital customers want to know that we’ve got that capability.”
The two main components of the Qualcomm Life offering are 2net and Capsule (which it acquired by buying Capsule Technologies in 2015). Capsule is a connectivity platform that links end-devices with the hospital IT and EMR systems, which also includes devices, networking equipment, and software. 2net is more focused on the cloud-based application side of things, but also provides the hubs and mobile gateways that connect the end-devices to the cloud. It included the smartphone applications and SDKs used by the patients, as part of the out-patient and remote patient monitoring. There’s room to rationalize the two brands, now that Qualcomm isn’t around to object to its 2net baby being assimilated by the Capsule branding.
It seems that Qualcomm Life had emerged into something that Qualcomm no longer wanted – a fairly stable, uneventful platform offering, which wouldn’t drive the sales volumes for Qualcomm’s chip designs that it wanted. For Francisco Partners, it seems like this fairly straightforward offering is something that can be easily grown into a major player in the sector, without being burdened by disappointed parents.
Connected healthcare will continue to be a major growth area for the IoT. While it might not drive billions of new connected devices, it can generate transformational amounts of data. However, based on IBM and Qualcomm’s fortunes, it does look like a market that major technology firms can’t just simply stroll into and enjoy immediate success.