InterDigital, James Nolan, EVP, Research & Development

Rory Moore:Good afternoon, everyone. Here we are, at CES 2014. And we’re at the conference room at CES with InterDigital. They have come out here from Pennsylvania, but they also have facilities in San Diego, where we’re located - CommNexus - and we’re with Jim Nolan, Senior Vice President, InterDigital.

Though they’re not a household name, to the average person, in technology, their IP is everywhere, literally. In fact, about a year ago, they provided Intel with a significant patent portfolio in wireless, which is probably one of the reasons that Intel is now reenergized to enter the wireless space.

So, for the layman in the audience here, please tell us what InterDigital does.

James Nolan:Well, InterDigital has a legacy of creating the next-generation technology. So, if you look at InterDigital historically, we have been a digital wireless or digital mobile technology company from its inception.

So, we did 2G before there was a 2G, a 3G before a 3G, and then 4G, and now we look to do the next G; you have to develop the technology for that next generation.

So, we look at, what do we think the next-generation networks and devices will need, in terms of technology? And it tends to be the embedded technology that, as you said, most people don’t know of us. It doesn’t come to - you know, it’s not readily handy, or something that’s a branded type of technology.

But what InterDigital creates is the enabling technology that enables devices and networks to work.

Rory Moore:So, as the industry, especially wireless - video is overwhelming the network, and everyone wants a full 1080, they’re looking at 4k coming, et cetera, et cetera - what are you doing at InterDigital to enable that to occur?

James Nolan:Well, a couple of different things. And a lot of this, from the video perspective, is being run out of our San Diego office. Our neighbor’s CommNexus.

James Nolan:So, we look at it from two different perspectives. We look at it is that video is the main driver of the use of bandwidth. And we look at it is any way that you can save that bandwidth or, you know - both save bandwidth, in terms of saving cost and power reduction - the other is also user experience.

So, we look at it as, how can we optimize the user experience? So, we’ve done is we’ve created technologies that optimize the delivery of video, based on the context or how the user is using that device. So, we’ll actually adapt how much bandwidth is being used based on how close the device is to the user.

So, if the device is very close, it might be a hot HD. As I move it away, I can’t tell the difference, and it will actually reduce the bandwidth by half or more. And that actually reduces the traffic over the network, and it reduces the cost for the content delivery people through the CDN, and it also reduces the operator’s cost and bandwidth.

What we also do is we also provide Wi-Fi cellular handover technology. And what that does is that’s really the integration. People talk about HetNets; that’s really what enables devices to hand off seamlessly between networks, and to maintain the quality of service of largely the multimedia content, which is largely video.

So, our perspective is, any way we can save the bandwidth, and provide the best service to the user. That’s the way we look at it, as an underlying technology that we create.

James Nolan:Yes, it is. Great point. If you look at it historically, InterDigital had been a company that was more wireless and mobile to the device. These technologies from video and heterogeneous networks are both software-based, and they’re agnostic to the silicon.

They could target it on devices as part of clients - either as part of applications or as client devices that an operator or a handset OEM would load onto a device.

And from a network perspective, also, software would reside in a server, an operator’s network, or back in a content provider’s network.

Rory Moore:Let’s talk about some new sectors, beyond just mobile - which is obviously getting a lot of talk here. Let’s look at sectors that are growing like crazy.

The digital health area of the convention has never been bigger, growing almost exponentially, it looks like. I think it’s 1/3 of an entire floor now. You look at machine-to-machine, telematics. What areas are important for InterDigital NAT space?

James Nolan:Great, great point. From a machine-to-machine and really expanding out to an internet of things, a web of things - we really look at all of those applications - healthcare, telematics - as currently today are very siloed machine-to-machine implementations.

So, we are actually developing software platforms for the next-generation standards that actually create horizontal platforms that allow all the different verticals or these different applications to use a common software layer.

So, it’s a software layer that would sit in the cloud, or in a gateway, or on devices. And we’re developing that.

And we’re also working in a joint venture with Sony, where we’re developing that M2M technology collaboratively with them.

So, we see this as the next generation, where we really enable very low-cost machine-to-machine, internet of things, web of things, type of applications, where all of that software becomes simplified, and it just becomes web applications to end users. So, it’s much simpler for us to use those technologies.

Rory Moore:Going back to remote healthcare, wearables - you know, it’s one thing when your video is buffering, but if you’re sending an EKG or something that, you know, has to HIPAA-compliant, it has to be [5-9s], et cetera, et cetera - do you see that as occurring, that kind of reliability for remote healthcare on the network, what you’re building?

James Nolan:Well, yeah, I think that’s a great point. I think when you look at it, it really depends on the type of devices that are being used. So, there are certain devices for machine-to-machine that are best-effort internet-based, and there may be some delay in terms of how they’re used, and then there are certain applications in terms of healthcare where you really need to use wireless technology - in particular, cellular technology that can be more robust, and is not just simply best-effort.

I think that you can have more of a guarantee of service, of delivery, for different applications.

But, as you said, being wireless and mobile, even sometimes the best technology can’t be robust everywhere - or it may be more robust, but maybe not robust everywhere.

Rory Moore:So, if you look at another area, having to do with smart grid, energy, do you play in that area, as well?

James Nolan:Yeah, it’s the same for us. We look at it as a software-defined platform that we work on - a service delivery platform or an application-enabling platform - and it can support telematics, smart grid, lifestyle, and healthcare and fitness type of applications.

So, it’s essentially you would operate through at an SDK or an API level, at the web level, and then this would extract all of the different things that are in a network - security, authentication, data management - from the individual that was launching that service.

So, the person launching the service would just create a web-based application that connected through that, and it would extract all of those things that are done in a network, whether it was done through a cellular network, or whether it was done through ZigBee, or Z-Wave, or other technologies.

Rory Moore:Are you going to be involved with projects, much like Qualcomm does - they’ll create prototypes? They will not go into production, but they kind of seed the market, seed the industry with certain hardware prototypes. You do any of that?

James Nolan:Well, from a hardware prototype perspective, what we do is, we develop the technology through proof of concept on a hardware platform. But in most cases, what we’re developing is actually a software that runs on those platforms. So, for us, the hardware platform is a proof of concept, and that will deliver the software to customers.

And our customers, as you said earlier, it’s not as well-known, not a branded company. Our customers are customers that would integrate that software into other platforms.

So, for us, hardware platforms are proof of concept, get the customers up and running on that software very quickly, and we would help them migrate with services onto commercial platforms.

Rory Moore:Okay, last - give me an example of an InterDigital effort, technology that the average consumer touches every day.

James Nolan:Great question. One that we’ve done in our timeline, in terms of developing technology, is very long, but we developed software stacks for 3G and 3 1/2G solutions. So, InterDigital actually created software stacks that ran on a number of different companies’ chipsets.

So, there are a number of different, very popular handsets that ran InterDigital’s software, that actually ran the wireless modems.

So, those are technologies we developed, and we’re developing 3G and 3 1/2G technology. And that technology got embedded on chipsets and onto handsets - tens and hundreds of millions of chipsets and handsets.

But you would never hear of InterDigital, but InterDigital has been in some of the most popular handsets that are out there, from our actual software running on those handsets.

Rory Moore:That’s terrific. Well, that’s some great color on InterDigital. And thank you for joining us, and thank you for serving on the CommNexus Board of Directors.

James Nolan:Thank you. It’s my pleasure. Thank you, Rory.

InterDigital, Ping Tan, Senior Staff Engineer Smart Access Manager

Rory Moore:- CES 2014, CEO CommNexus, here with Ping Tan. Ping’s with InterDigital.

And if you’ve been at a football game, baseball game, any kind of sporting event, one of the things that you miss when you’re home is that instant replay from various angles. It’s been able to get on Wi-Fi, to understand all the different services and activities that are occurring at the stadium. You can’t do that.

What we have here is a technology and a design that InterDigital’s completed that’ll enable you, as a fan, to enjoy the same experience you have at home at the stadium, and be there in person.

Ping Tan:All right. Yes. So, here, we have a smart-access manager. And what this is, is actually, you know, it gives intelligence, and, you know, it has also seamless, and, also, it’s secure.

So, on the device - I have a device here - that, you know, anywhere that you are - when you’re at home, at the stadium, or anywhere else, you know - at a shopping mall - you would have the best-available network that can be connected, you know.

And we also monitor, you know, the quality of user experience. So, when you’re connected to a Wi-Fi, and, you know, the Wi-Fi quality is bad, the device knows about that, and it will, you know, use another network.

So, let me show you - for example, you’re talking about the stadium. If you’re at a stadium, the device, you know, receive a [pulse E] from, you know, a server, and you are automatically connected to, you know, this network, stadium Wi-Fi.

What if the stadium Wi-Fi is bad? What happens there? So, let’s generate some congestion, you know, on the stadium Wi-Fi. And you’re automatically connected to the next-best network.

So, this provides the best available network anywhere, and is seamless to the end user - and also provides, you know, the operators to be able to push pulse Es, and improve their network.

Rory Moore:So, for the fan in the stands, they’re on a Wi-Fi at the stadium. They’re receiving content from the stadium. They’re receiving replay and camera vantage points they’re not able to see unless they’re at home. So, now they can see that replay, see a different perspective of the game on their handset.

Even though they’ve seen it live, they can review it, they can see player statistics, video about the history of players. All that can be free on their Wi-Fi while they’re at the stadium.

Ping Tan:Right. So, you know, we provide, you know, this ability for users to be able to connect, you know, wherever they are - even at places where - in stadiums, where there’s a lot of congestion. And even when you get connected to a Wi-Fi network, you know, you may not be able to, you know, stream what you want to see.

But, you know, with this, we know the condition of networks, and we provide the best network available, be it cellular or Wi-Fi. So, we manage, you know, the networks that are available to you so you could connect to it.

Rory Moore:And InterDigital creates the software to do this.

InterDigital, Bill Merritt, CEO: What to expect in 2014

Rory Moore:Hello, everyone. This afternoon, at CES 2014, this is Rory Moore, CEO of CommNexus, here with the CEO of InterDigital, Bill Merritt.

And, Bill, you’ve been going to this show as long as anybody. You traveled the world going to some of these shows. And we were talking earlier about industry sectors that have been talked about over the years, but they weren’t quite ready; the industry wasn’t ready for them, the technology wasn’t there, the cost of silicon wasn’t there, the development.

So, let’s talk about some areas that you’re excited about, where InterDigital can enable these areas to grow and be important sectors.

Bill Merritt:Great. We’ll start with healthcare. Terrific.

Well, I think that, you know, you’re absolutely right. I think the wireless opportunities continue to be there. They’re different than they were, years ago. It used to be all about the handset, which was a talking device. Then it became all about the smartphones, and tablets, and things like that. But they were basically cellular devices.

And as the networks have built out, right now, you have a whole new opportunity. So, one of the big things at this year’s show is sensors, right? So, why are sensors so exciting now? Because the networks are finally there to support them. And I’ve said before, you had spotty networks or inefficient networks.

Now you have pervasive networks, and cellular Wi-Fi, and a whole bunch of other things, which now make the sensors’ connectivity capability so much better, and then the technology for the sensors themselves are so much better.

And for us, it’s a great opportunity, because we’ve been working on machine-to-machine technology, which is basically, you know, internet of things - connecting everything to everything, every person to every person - and really taking all of those wireless networks that are out there, and using them very efficiently to connect up all these things.

And I think it’s going to create two great opportunities. So, healthcare is a great opportunity, right, because now people who before had to stay in the hospital to be monitored, now they can go home. And people always do much better at home getting better than they do in the hospital, right?

It creates other opportunities, because the amount of data that will be created in exchange through wireless health - if people can then begin to mine that data, it’s just like - you think about all the things that Google’s been able to do with advertising. I think it’s not so much - the value isn’t so much in them giving you a position on Google Maps; it’s knowing where you’re going, why you’re going, and creating that database that they can then access to give you better information the next time you’re going to do something.

Wireless also can be the same thing. You can create this river of data for medical purposes. That could enable much better, more efficient services, and much better care for folks.

So, it’s one of many areas, and I think that’s, to me, the exciting thing about sensor technology. It’s not so much connecting one person to another; it’s creating an ocean of information now that can be mined and used for all sorts of purposes.

And the networks that we’re helping to create at InterDigital will drive that. So, very exciting for me. I think that’s the number one thing I’ve seen here this year.

Rory Moore:You know, as an entrepreneur myself, it’s very difficult for a startup to get a foothold in an area, especially when the cost of capital is so much, and venture capital is hard to raise. So, if you’re a startup - you want to be a chip company, you’ve got to have $200 million in the bank before you even begin.

But these new sectors, I think, will allow emerging companies. The entry point cost is less. They don’t need cutting-edge facility, like you do if you’re making an app processor for a handset.

Bill Merritt:Right, absolutely. Because you think about, you know, some of the sensors out there can be just plain Bluetooth sensors. And if you’ve created a very efficient network, where it can glom onto - you know, you think about something that can glom onto everybody that walks by’s handset, just for the purposes of getting a signal out, you know, that could be a Bluetooth sensor. You can use Wi-Fi for so many things. And it’s so much cheaper.

So, you’re right, you know. It used to be, if you were going to be a chip company, especially in the cellular market, that is a - you know, we did it at InterDigital. It’s a massive investment, and, really, that massive investment was a huge barrier to entry for folks.

With these new applications - which will not be - you know, in some ways, they’ll be a niche, compared to maybe the global-wide, but there are still going to be huge opportunities for folks.

So, I think you’re right. I think there’s great opportunity for small companies to come in. They won’t be constrained in terms of needing, you know, access to the most expensive processing technology. They don’t need to do that. Instead, they can bring other types of innovation into those spaces, and be very valuable enterprises.

Rory Moore:So, you said a brute-force transistor size - it’ll come down to clever design, and software, and leverage of the network.

Bill Merritt:Absolutely, it will. I think you’re exactly right, and I think it’ll create a lot of opportunities for a lot of new companies. It also can create opportunities for companies that have struggled in the current environment, to kind of, you know, catch up with the Qualcomm, catch up with other folks.

They can redirect now, because you think about how pervasive, you know, wireless health could be. You know, you could make an entire business just supplying wireless health, right?

Rory Moore:Well, you’re also known as an IP company. And, you know, that’s an area that, for a startup, is hard to get - hard to find new IP, especially in areas that the large companies control, with thousands of patents. So, this also opens up - there might be opportunities for small emerging companies.

Bill Merritt:Absolutely. I think that, you know, typical with any type of, you know, investment in this case, if you come up with a really good idea, you have two options, right?

You have the option to drive that product into the market yourself, right? But with a good patent system available to you, you also have the ability to protect that technology, and you can either sell that particular technology to somebody else, or you could license it. You have a lot of avenues for bringing that technology into market.

And so, you know, patents have been critically important in this market. And I’ll take it back - not so much patents, it’s the incentive to innovate, and compensating folks for innovation has been so important in driving wireless. Think how far you and I have been coming to these shows - how far it has come in such a short period of time.

Why is that? Because people have believed that if you make the investment, it will be protected. And I think, you know, that will continue.

And so small companies - even if, at the end of the day, they’re not the ones with the product on the Best Buy shelf, the technology could be in that box.

Rory Moore:So, since you have basically a worldwide view of IP protection around the globe, do you feel like that the companies internationally are behaving more appropriately with IP, because of the fact that it’s such a global economy with electronics?

Bill Merritt:I think, like anyone, I think you got a mixed bag out there of, you know, good behaviors and not-so-good behavior. I think, you know, certainly, the market is so large that, a lot of times, the economics around licensing become so big - because we talk about an industry where you’re shipping out a billion and a half units. That’s a lot of money.

But I think, you know, generally, there continues to be a very high respect in most quarters for intellectual property. I think those folks believe that incentive out there, the fact that that creation of yours is going to be protected is why people make the investment.

You know, think about pharma. No one would ever invest in pharmaceuticals, but for that strong patent protection around pharma.

Bill Merritt:And I think people are beginning to better understand the huge investment that actually goes on in wireless. You know, it’s worse. Frankly, most other investments out there turn to how much money’s spent on standardization. And I think as people appreciate that, they’re going to understand. The reason people make that investment is because they’re protected.

Rory Moore:Last question - I don’t know if you’ve had a chance to walk much of the show, because you’ve been working. But has anything here just really blown you away?

Bill Merritt:So, I haven’t had too much time to walk around, so not yet, but there always are things that blow you away. I think, you know, the amazing thing to me is, you know, the capability of these devices. I think the consumers now have come to expect so much.

And you think about what we’re packing into a phone these days, and that’s probably 10 times the technology that was on all of the originals - Mercury, Gemini, and Apollo launch vehicles combined - into a device that’s this big, right? It’s remarkable.

So, I’ll take a walk around. I heard sensors are hot, and wearables are hot. So, we’ll see what’s out there.

VIDEOS

InterDigital, James Nolan, EVP, Research & Development

InterDigital, Ping Tan, Senior Staff Engineer Smart Access Manager

InterDigital, Bill Merritt, CEO: What to expect in 2014