Nice summary from EAL on Yahoo (hope mention of YAHOO here is not a thread violation, as some people look down on YAHOO although there are several good posters there)
Tough topic for a small space...
by: Explorer_at_large (36/M/Southwest) 35365 of 35365
There are three primary wireless 'air interface' technologies: AMPS (traditional analog), TDMA (GSM & IS-136) and CDMA. AMPS is an anachronism; it consumes too much spectrum, uses too much power, and has inferior voice quality...it's a legacy technology not germane to the discussion.
TDMA (time division multiple access) was the first widely deployed digital standard. GSM, is a pan European standard, and combines network protocols (MAP) with a TDMA air interface (the A/I is how information is transmitted between the handset and the basestation controller). IS-136 is based on the U.S. network protocols (IS-41) and a similar TDMA air interface. TDMA has been around a long time; its technology is well understood; manufacturers are well down the technological learning curve, so equipment is relatively inexpensive to make; it provides decent leverage over AMPS (2x-4x more capacity depending on network configuration and a myriad of other factors)...BUT, it is also MATURE, i.e. most of the capacity gains have been realized, and it is architecturally a poor schema for wireless data.
CDMA (code division multiple access) was conceptualized as a secure military communications technology. Dr. Jacobs, Dr. Viterbi, Klein Gilhousen (and a boat-load of other very very large brains) managed to commercialize the technology...something little, inconsequential companies like Ericsson and Nokia said couldn't be done. Using a similar rate vocoder (the device that converts voice to digital), CDMA provides a 3x-4x capacity advantage over TDMA-based technologies. This capacity advantage is expanding as the technology continues to improve and evolve, i.e. 1XRTT should take this diferential to 6x-8x). This differential, in and of itself, affords CDMA-based wireless carriers with an enormous competitive advantage over those that deploy TDMA-based technologies, i.e. look at the explosion of capital spending at ATT due to capacity constraints). However, the kiss-of-death for TDMA is that it is poorly suited architecturally for to work with high-speed data. This is why Ericsson and Nokia ultimately began pursuing a version of CDMA called W-CDMA (wideband CDMA). At this point commenced a global pissing match between QCOM and Ericsson/Nokia. Long story short, in March Ericsson caved, admitted that Qualcomm owned the enabling technologies (intellectual property rights) for CDMA, and agreed to pay Qualcomm royalties.
As a result, investors in Qualcomm can expect the company to collect royalties from EVERY company selling mobile CDMA equipment worldwide. At the same time, it has become apparent that CDMA will be THE worldwide standard for third generation wireless. That's a pretty damn big twinkie, in-and-of-itself. And is similar to the royalty Microsoft extracts from the PC industry every time a computer is sold. Qualcomm also manufacturers semiconductors (ASICs) that enable and facilitate the production of CDMA equipment. These ASICs are the 'brains' of the CDMA device, not dissimilar to the relationship of the Intel Pentium to the PC. Wall Street finally figured all of this out circa March of this year...which is why the stock went asymptotic (ha! spelled it right this time).
Lots and lots of people (who bet wrong) hate Qualcomm. These include various arrogant, knowitall, institutional investors who missed the stock and can't live with themselves; various shorts who have had their sphincters enlarged by the enormity of their horrendous analysis, and various companies, engineers, so-called scholars, pundits et al who bet that CDMA wouldn't work. Intellectual and economic jealousy is a terrible thing. Anyway, the business case is enormously powerful and typically surrounded by lots and lots of negative noise. The know-nothings have been wrong for ten years...but will keep on being wrong. It's actually pretty funny. Hope this helps. EAL
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