Qualcomm has decided to terminate its direct-to-device partnership with Iridium because smartphone manufacturers have not widely adopted the satellite-compatible chips. The high price and lack of technology standards were cited as contributing factors for the low adoption rate.
The partnership, which was announced at CES in January, was expected to offer an Android alternative to Apple’s emergency messaging via satellite. It had the potential to connect IoT devices and vehicles in the future.
Qualcomm showcased the capabilities of its Snapdragon Satellite platform in messaging on Iridium’s L-band network. The chipset was made available as an option in the flagship Snapdragon 8 Gen 2 Mobile Platform used by phone manufacturers like Samsung, Motorola, and OnePlus.
However, adoption of the satellite-compatible chips did not take off as expected. Several original equipment manufacturers (OEMs) had signed up for the partnership, but their activations were delayed until 2024. Samsung, for instance, did not include satellite connectivity in its Galaxy S23, and it is uncertain if Iridium will be the satellite provider for the upcoming Galaxy S24.
Qualcomm will terminate the agreement on December 3, leading to a 5.5% drop in Iridium’s stock after the announcement. Iridium, on the other hand, has expressed its intent to establish new relationships with OEMs, chipmakers, and developers.
Iridium’s CEO, Matt Desch, is disappointed with the partnership’s outcome but believes that satellite connectivity in consumer devices will still see growth in the future. He sees Iridium as well-suited to be a key player in this emerging market.
The termination of the agreement will not affect Iridium’s guidance for this year or its projection to achieve $1 billion in annual service revenue by 2030, as they did not factor Qualcomm service revenue into their official guidance due to the uncertain adoption timeline.
Iridium also hinted at the possibility of offering a future narrowband non-terrestrial network (NTN) service, particularly for use cases like agriculture and asset tracking.
Analysts suggest that the Qualcomm-Iridium deal faced challenges due to price and technology issues. Smartphone manufacturers were concerned about the economics and objected to the price Qualcomm was charging. Additionally, the reliance on Iridium’s proprietary technology instead of standards-based tech limited the connectivity options for the Qualcomm chip.
There is ongoing debate in the satellite industry regarding the size of the direct-to-device opportunity and the best approach to address the market. While Apple partnered with Globalstar and Qualcomm partnered with Iridium, other companies like SpaceX, AST SpaceMobile, and Lynk Global are designing satellites to communicate with unmodified cell phones using terrestrial spectrum through partnerships with mobile network operators.