Since it was founded in 1985, San Diego-based manufacturer QUALCOMM has created state-of-the-art digital communications systems that have turned the heads of high-technology industry observers, including those at the Pentagon. Administrators there have passed along several contracts to the fledgling company.
But last Thursday, when the government again tapped QUALCOMM, company officials were more excited than usual. Why? The new contract could enable QUALCOMM to participate in a technological revolution, entering what industry analysts say may be one of the most lucrative businesses of the 1990s: development of high-definition television, or HDTV.
The Pentagon is spending $30 million over the next three years to develop high-definition technology, which it plans to use for several purposes, including building better surveillance systems. Pentagon officials have not yet determined how much of the funds will go to QUALCOMM.
According to QUALCOMM President Irwin M. Jacobs, the company will focus on applying digital processing and transmission techniques to develop HDTV for defense applications. Jacobs added that QUALCOMM has previously applied its digital techniques to NASA and cable industry projects.
Although HDTV's potential for military applications is substantial, industry observers say the technology may prove more valuable in the consumer market. Some say sales of HDTV sets and transmission equipment could reach $50 billion by the year 2000. Observers say HDTV will prevail over existing TV technology by offering sharper and brighter images, plus the sensation of watching live images.
In addition, some industry experts say, HDTV could help U.S. manufacturers recapture a chunk of the consumer electronics market that they have lost to the Japanese in recent years.
"Whether our strong position in consumer electronics can be recovered solely through HDTV remains to be seen," Jacobs said. "But there's no question that HDTV will have quite an impact. We are certainly interested in its commercial applications."
As big a role as HDTV may play in the consumer electronics market, industry observers say that is only a "piece of the HDTV puzzle."
"The fact of the matter is that high-definition technology is going to affect every segment of the electronics industry," said Pat Hill Hubbard, vice president of science, technology and education policies for the American Electronics Assn.
The Santa Clara-based association--made up of 3,500 electronics and information technology companies--is one of the leaders in lobbying the government for more high-definition technology development funds.
"HDTV strictly relates to television sets," Hubbard said. "But high-definition technology has applications in medical diagnostic equipment, air-traffic control devices, computer screens, duplicating machines . . . to name just a few.
"If we don't develop high-definition technology there will be an erosion of market share in computers, semiconductors, a loss in any market that uses technology involving imaging," Hubbard said.
Such fears are at the root of the association's campaign to get more research and development funds. Without federal assistance, industry observers say, they will lose the race to develop high-definition systems to the Japanese, who already have lead in the new field.
But Hubbard says that U.S. manufacturers are seeking a matching grant program, not a complete government subsidy.
"The world is doing business in a different way these days," Hubbard said. "If you look at Japan or Europe, their governments and industries are joining together and financing projects together. Meanwhile, in this country, we still believe that individual entrepreneurs can break into new emerging areas where incredible amounts of capital are needed and compete against these global powers. That's just not possible anymore."
Electronics manufacturers' concern about the high-definition technology race was emphasized last week when they released a letter to President George Bush calling for more research and development support.
American Electronics Assn. officials have strongly supported the Pentagon's interest in high-definition technology and are trying to persuade the government to give the Department of Defense's research agency more money for HDTV. In January, the Defense Advanced Research Projects Agency announced that it would spend $30 million to develop high-definition technology. Thus far, the agency has awarded contracts to eight companies, including QUALCOMM.
"High-definition technology can be used by the military for sending video or sending pictures," Jacobs said. "For example, it can be used in remote pilot vehicles that are used to scan the countryside or for other surveillance systems."
Defense officials also have expressed interest in using high-definition monitors for pilot training.
In addition to the HDTV contract, QUALCOMM is working on 10 defense contracts worth a total of $15 million to develop several types of communications equipment.
The company, with 330 employees, is best known for OmniTRACS, a two-way, satellite-based, mobile communications system. It has been eagerly received by trucking companies that use it to maintain constant contact with their fleets.
For the fiscal year ended Sept. 30, QUALCOMM posted revenues of $31 million, up from $10 million in 1988. Sales in 1986 were $2 million.
QUALCOMM's corporate headquarters, including research and development facilities, occupy a 60,000- square-foot building in Sorrento Valley. A nearby 45,000-square-foot plant is used for manufacturing.