Will Qualcomm’s Augmented Reality Play Augment Its Business?

Qualcomm (s qcom) is the leading wireless chipmaker, selling about one in four of the radios used in mobile phones last year. So what’s a chipmaker doing offering an augmented reality software development kit and a $200,000 prize for developers who build something cool with the software platform? Qualcomm did just that on Wednesday, when it showed off a way to play Rock’Em Sock’Em Robots using a patterned piece of paper and a smartphone, then announced an AR development center at Georgia Tech.

Qualcomm’s CEO Paul Jacobs explained to me that the chipmaker’s augmented reality love is about finding a killer app for mobile and, yes, selling more chips. Augmented reality, the act of overlaying information on an image taken by a mobile device, uses a smartphone’s camera, motion sensors and the graphic processor, and requires a decent applications processor. Conveniently, Qualcomm has a 1GHz hotshot application processor with an integrated graphics capability it bought from AMD, as well as the radios that keep the handset connected to the network. But Jacob’s doesn’t stop at the chips.

“We actually think that it’s going to be the user interface for the world,” he said in an interview with GigaOM. “That basically you will use your phone to look at objects that don’t traditionally have user interfaces  — for example people — and you’ll pull information up on them, and be able to manipulate things.”

He offers several use cases, such as being able to pull up a person’s contact information merely by using your camera, or going into a room and transferring photos taken on your phone to a frame hanging on a wall. The latter would presumably would require Qualcomm’s peer-to-peer technology, which allows any content to run and be shared on a variety of devices, no matter their operating system.

“I also think [AR] going to be a pretty exciting thing for consumers,” Jacobs said.” It’s going to be the reason for someone to say ‘Okay that’s the next cool thing happening on a mobile device.'”

But Qualcomm is not offering this SDK solely in the hopes of making consumers happy — it wants to sell more of its radios and phones and give its applications processors the edge. “Were’ definitely going to optimize it on our chipset, so it will work better on our chipset,” Jacobs said. “I guess because the SDK works at the level of the operating system, it’s conceivable that other people could use some of this stuff on other hardware, but we will absolutely spend time optimizing this.”

With its CDMA licensing revenue set to decline as 4G networks are deployed in the coming years, Qualcomm is searching for the next compelling technology that gives it an edge in the cutthroat wireless chip business. Qualcomm’s aware that its dominant position in a commodity chip market isn’t the way to keep its business growing, and is betting on displays, application processors and, now, augmented reality.

Related GigaOM Pro Research (sub req’d): Report: Mobile Augmented Reality Today and Tomorrow