Dutch,
Robert is more informed than I, however, let me try to answer your question. First, Vari-L grabbed 75% of the base station market from the Japanese by having superior technology and staff and by continuing to invest in it. All things considered, the base station market is still early in its life cycle, and VARL has 55% gross margins. It's hard to position a product much better than that for a fast-growing market. The wireless market is probably not more profitable per VCO (and may be even less profitable) simply because its greater size creates more pricing pressure. However, if even margins dropped to 50% or even 45% on 20,000,000 units/annually in the subscriber market, we'd all cry ourselves silly watching our stock value quadruple.
You can be your own judge as to the growth of the cell phone market. I resisted for years and then got 1 for my wife because her sense of direction is non-existent. Every 2 years I've gotten her a new phone for free by negotiating a new phone contract. Now I can add 3 extra users to our same account and get 600 minutes of calls/month for $40. So, I can get myself a phone and 1 for my mother and 1 for my mother-in-law. The phone company will basically sell me $100 phones at $30 so why not? Everywhere I go I see people using their cell phones. My cousin just got 1 for her son in college, so she can always reach him. 5 years ago, I couldn't have imagined any of this.
FWIW
Jeff |
