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Strategies & Market Trends : Gorilla and King Portfolio Candidates
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To: Jean M. Gauthier who wrote (6548)9/18/1999 6:23:00 PM
From: Mike Buckley  Read Replies (1) of 54805
 
Jean,

CDMA will have to start winning over the GSM territories, or else will never become a gorilla, but be a wireless telecom "King & Royalty play"

I have a little different take on it. I think Qualcomm is the proven gorilla of the CDMA space. CDMA is a technology upon which any of Qualcomm's competitors can choose to build their proprietary technologies. Qualcomm's proprietary innovations on CDMA technology have become the standard set by the product adopters. Everything from page 1 to page 308 (of the new manual) explains why it will be extraordinarily difficult for Qualcomm to be dethroned.

Once we accept that, we have to question how large the market is for CDMA. Do we need Europe to accept CDMA in order to get monstrous returns from Qualcomm? My thinking: No.

Though some would argue that TDMA and GSM make it more difficult for CDMA to expand, I would argue just the opposite. Because operators of existing TDMA and GSM can add CDMA at their own timetable as a layer on top of the others, and because 3G will allow end users of three-mode phones to roam from cell to cell regardless of the platform, I think the pre-existence of GSM and TDMA makes it easier for CDMA to expand.

I don't know enough about GSM and TDMA to know whether or not each of those spaces has its own gorilla. But I feel they are threatened by the discontinuous innovations of Qualcomm more than Qualcomm is threatened by any inability to expand market share.

Just my opinion.

--Mike Buckley
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