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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: tekboy who wrote (29135)7/31/2000 3:44:23 PM
From: alburk   of 54805
 
RE SPINCO

Is it fair to say that prospective manufacturers of products that include CDMA technology have two Decisions to make in this order.

1) Whether to participate in the manufacture of CDMA products. A yes answer of which requires a royalty fee for the right to incorporate CDMA (QCOM's broad CDMA IPR) in the manufacturers products.

If the answer to 1) is yes then--

2) Whether to buy CDMA chipsets from Spinco, manufacture CDMA chipsets using Spinco IPR and know how, or go it alone without the benefit of Spinco chipsets and IPR (which may include buying chipsets from other manufacturers).

The result--Power,focus and elimination of internal conflict.

QCOM becomes a tollgate to CDMA--Prospective CDMA manufacturers must pay the toll to proceed and have little bargaining power to reduce the toll.

QCOM focuses on pushing CDMA technology in general and in all forms and without internal conflict(with the chipset division).

QCOM can defend its IPR vigorously with less likelihood of compromising Spinco's competitive position.

Spinco focuses on manufacturing CDMA chipsets and hybrid chipsets(eg CDMA and GSM) without internal conflict(with QCOM). Spinco can swap manufacturing IPR and know how, as it sees fit, to expand its markets and marketshare.

QCOM has clarified its position to those who wish to participate in CDMA. Prospective participants in CDMA have a clear decision path. And Spinco has been unleashed to compete.

It all seems to make sense to me.

Andy
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