Well Mike, Compliments of Ozeir"s email to Moore, here is our answer on what Moore thinks of Qualcomm:
Ozeir.Nassery@ual.com writes:
<< Subj: Qualcomm: a Gorilla or a Prince ?
Date: 6/10/99 7:43:24 AM Pacific Daylight Time
From: Ozeir.Nassery@ual.com
To: GeoffMoore@aol.com
CC: LindyBill@home.com, MBUCKLEY@aol.com, kandy@candy.ultranet.com
Hi Geoff,
A few of us have a position in Qualcomm and we feel that the company
truly is becoming a gorilla. But in one of your digests you stated
that the company is not a gorilla but rather a prince in a market where
Erricson is the king. I have done a lot of research and I have read
some of the techie's comments in the Silicon Investor's web pages
regarding your comments.
The feeling is that the future of wireless will be using CDMA
technology and Qualcomm is in the position of receiving licensing fees
and royalties from every single CDMA phone sold world wide. Can you
please take a moment and review this company and let us know in a
little more detail as to why you don't think their future business
model does not have the characteristics of a gorilla like MSFT or INTC.
I know you are very busy person and I want to thank you in advance for
your input.
Ozeir >>
Gang,
As you guys know by now, I am not a stock-picker per se, so I comment on
methods, not on specific answers. Here's the key question for Qualcomm. How
much proprietary control did they have to give up over CDMA in order to get
the Ericcson deal? I am not close enough to the situation to know, but I had
inferred from the press coverage I read that basically they had to
essentially open up the standard and relinquish control to get the deal.
That's what you need to find out.
Now, supposing they did, they still should have significant advantage in
designing to the strengths of the standard--hence their ability to compete in
a royalty game. But the G3 implementation that incorporates CDMA will, I am
guessing, roll out sooner and faster in Europe than in the US. If that is
the case, then I think the European vendors will have a significant execution
advantage, hence my guess of prince for Qualcomm rather than king.
But please note the assumptions I am making. Another plausible future might
go like this. Qualcomm licensed CDMA but kept some Trojan Horse technology
which can create a significant performance edge while still not violating the
standard. Under this model, its products simply outperform the others, and
it rises to king.
I do not see how it can get to gorilla. The telecomm market has been
sensitized to gorilla power by the PC market, and by Cisco's gorilla power in
the data market, and I would be shocked if it had granted Qualcomm gorilla
rights for CDMA. But, as I said, I do not have the facts here, just the
models.
Geoff
My initial comment? Moore admits he has not done his DD, and is wrong, of course. LindyBill |
