Rick, you make some excellent observations. Actually, when I previously referred to GG as being somewhat "to the evangelical" side, I meant that he can ignore cost/market share/manufacturing efficiency and other such tiny factors that affect an INVESTOR as opposed to a TECHNOLOGIST.
Obviously, volume permits amortization of R&D and drives low cost manufacturing efficiencies and at the end of the day "he who is the least cost producer wins the day". In that sense, it would appear that our European friends with a unified GSM standard have an edge. If CDMA "wins", it, like any new technological standard, will have to prove 'superior' by a factor of 10:1 vs. TDMA/GSM. (I forget who originally stated this proposition but it has been widely accepted as a good rough measure of the cost/difficulty of disinvesting in an older infrastructure and adopting a new one. In essence it says that very good improvements on a process don't cut it, it's got to be massive or the resistance from consumers, old school engineers, CEO's and whomever else you can think of will result in the new stuff never seeing the light of day.) So the question is: is CDMA THAT GOOD?
One Gilder answer is that GSM/TDMA will "fail" as the world rushes to fill spectrum with graphics, video, data, and voice--that you can't slice and dice into ever small slots of time without running into the end of the game. From this perspective, GSM/TDMA hogs bandwidth and is "destined" to fail. There are more than a few straws in the wind on this one: the Japanese are running out of spectrum--too many folks chatting away on their TDMA cell phones. This was an important factor in the Korean decision to go CDMA, allegedly. In fact, if you look at those portions of the world without a prior investment in TDMA infrastructure, you will find that they have elected CDMA. Finally, I continue to raise the "Lucent" factor: it's not just QCOM that thinks CDMA is the cat's meow. Still there is no question that the final chapter of this book has yet to be written. I agree that Irwin Jacobs initially hyped CDMA's superiority, but consider this. Qualcomm and Sony have their phones on the market (actually two to four weeks)in time for the Christmas Season. Motorola just announced that they missed the market again (this is the second straight "blew it" for MOT--evidently this CDMA stuff is hard to make!)and therefore I think the evidence, for or against, will be rather rapidly at hand. If CDMA phones provide superior call clarity, resistance to cloning and tapping, fewer dropped calls, longer battery life, faster data transfer, and can leap tall buildings at a single bound, the consumer will let us know very quickly. I think the next four months will be an extremely important chapter in QCOM's life. Regards, Mike Doyle |
