Around the World With Qualcomm
by John Hammill
As we have discussed before, CDMA 1x has become a smashing success in Asia, and now Qualcomm's BREW (Binary Runtime Environment for Wireless) is starting to take off. KTF, the second largest carrier in South Korea, launched BREW services on its 1x network in January and already has 170,000 users. These users have helped KTF increase overall ARPU 9% with BREW users spending 4 times more on data services than non-BREW data users.
BREW was designed for the highly restrictive handset screen. This difference leads to richer content functionality. SK Telecom's NATE, a wireless Internet portal, is set up as a text-based table of contents. This reduces the number of clicks and time to get to a specific application. As handset screens get larger, the Brew layout will enhance the data experience even more.
BREW also offers better download speed and storage capability. KTF believes Brew is at least 20 times faster than Java, allowing more applications and software to be stored on the handset and longer battery life.
KTF explains that the wireless service operator pays a royalty to Qualcomm for each handset installed with BREW and that the new BREW handsets do not appear to be materially more expensive than non-BREW handsets of a similar model.
In September, gaming superpower Sega announced that it would develop game content and technology compliant with the BREW platform. Just last week, Walt Disney Internet Group signed an agreement to create wireless content also using the BREW platform.
Qualcomm is also benefiting from the ramp in sales of color phones in Korea. As we stated in the January 02 GTR chart story, color handsets now account for 45% of all 1x phones sold more over, 1x phones equal close to 100% of total sales. Qualcomm estimates that color phones have an ASP (average selling price) that is approximately $40 higher than phones with non-color screens. This significantly benefits Qualcomm's royalty revenues which are based on the total unit price.
KDDI, the Japanese CDMA, carrier has reported that it is having a lot of initial success with its newly launched location-based services using Qualcomm's gpsOne solution. These handsets and the KDDI service plans for wireless navigation represent the first nationwide commercial position location system available anywhere in the world using mobile phone networks. GpsOne enabled handsets and services coupled with the nationwide launch of CDMA 1x by April 2002 will provide KDDI an almost unlimited range of new products and features with which to differentiate and consequently steal market share from the telecom giant NTT DoCoMo.
China, India and Latin America represent enormous, underdeveloped markets. 2001 year-end subscriber numbers for China totaled 145 million or approximately 11% penetration. China Unicom launched its CDMA-based network on December 31st, the first and only CDMA-based network in China at this time. Still rolling out its Phase I (IS-95) network, Unicom has reported 1 million subscribers and has the capacity to handle 15 million, a number they hope to reach by the end of the year. Phase II will see Unicom placing orders for 1x equipment in mid-2002 and commercial 1x service going online by the end of 2002.
In India, Qualcomm has invested $200 million in the fixed-line telecom firm Reliance Communications, who last July won government licenses to operate fixed-line services in 16 Indian states covering over 90 percent of the population. The Indian government has allowed fixed-line firms to use CDMA local-loop wireless technology to offer cheap, mobile service in a bid to usher in a telephone revolution. Korean carrier KTF has been recruited to offer technological consulting and maintenance of their CDMA network, and Reliance will launch commercial services in September. Qualcomm has also made it clear that it is willing to support companies that want to manufacture CDMA-based handsets in India. India has less than four telephones per hundred people. For a nation with more than 1 billion people, that means 960 million of its citizens lack basic communications services. The Gartner research firm last year forecast India's cellular market to grow at a compounded annual rate of 52.5 percent, double that of China's 26 percent, through 2005.
Latin America, with almost 20 million CDMA subscribers, is the fastest growing CDMA market, with the number of subscribers in the region almost doubling in the past year. Telesp Cellular, Brazil's leading wireless carrier with over 5 million subscribers launched its CDMA 1x network in December and their growth will be aided by the zero IF chipset—allowing sub-$100 handsets.
Finally, we look to Verizon Wireless and Sprint PCS and the launch of their 1x networks in the United States. In a recent survey of Chief Technology Officers (CTOs) and Information Technologists (IT professionals), for the first time ever more than 63% have line item budgets for wireless data. This survey affirms our belief that data revenues in the United States will at first be driven by corporate uptake. Sprint PCS has created the Sprint PCS Business Connection Personal Edition and is in the best position to benefit. Most importantly, customers will be able to access their corporate e-mail as well as calendar, personal contacts and corporate contacts while mobile. Customers download and install the desktop software for the new email service via a CD or website. It is compatible with Microsoft Outlook and Lotus Notes. The software is also designed to give customers the ability to access and send files stored on their computer hard drive with no synchronization required.
Qualcomm's mastery of CDMA coupled with the unique products and services coming from all divisions of the company will secure its position as leader of the wireless world. |
