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Technology Stocks : The New Qualcomm - a S&P500 company

QCOM 170.17

-0.4%

10:40 AM EST

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To: gdichaz who wrote (6920)	2/26/2000 11:40:00 AM
From: Webster	Read Replies (4) of 13582

Regarding HDR tactics and the perceived difference between cdma and HDR. There are different perceptions regarding HDR and how it will effect the wireless market. These perceptions depend on your role within the wireless market. I would imagine the perceptions greatly vary if you are a cdma one operator, or a GSM operator (or T), or a handset provider (gsm and or cdma) or an infrastructure player. Add in the analyst perceptions which is a combination of the above and you get a tremendous amount of noise which will confuse the masses. Someone on this thread (please identify yourself) once said that cdma is to voice and HDR is to wireless internet. I think this is a very appropriate statement. qcom has always been several steps ahead of the wireless world. I remember Dr J. mentioning HDR at the 1997 shareholder meeting. When ERCY bought the infrastructure division no one in the industry picked up on the comment about HDR staying with qcom and the implications. I wrote a post a few months ago commenting on HDR and about "follow the money". HDR is a disruptive technology. It takes advantage of existing infrastructure and is complimentary to network operator's spectrum utilization. HDR is disruptive to infrastructure players plans to generate great revenues and puts GSM's (edge/gprs) in another weak position. It should be no surprise that HDR is not included in research reports as an alternative path to high speed internet data. If you are an infrastructure player, 3G or WCDMA looks very attractive to you. Operators (primarily GSM) would have to spend large amounts of money to create a high speed wireless internet data network. So if you are an infrastructure player one might be talking negatively about HDR or simply dismissing it (in public) as "proprietary" or non 3G. Add in supportive comments made by analysts and journalist that operators will have to bet large amounts of money on unproven data market - which supports comments about WCDMA or 3G being "delayed" until 03 and beyond. If you are a GSM oprator or T or iden network you "talk" about high speed data. Again infrastrucutre players and gsm handest providers promote that GSM can migrate to GPRS or EDGE as a means of incremental implementation of wireless data. If you are a gsm network operator (or T) this might sound more attractive alternative than WCDMA or 3G. We all know from the many outstanding technical posts on this thread that there are significant technical constraints with EDGE and GPRS. Options for these network operators (GSM /T) to adopt high speed internet data services include: 1. adopt edge or gprs, 2. do nothing, 3. talk about WCDMA or 3G (same as do nothing). They can adopt HDR, but suppliers are talking this down because it is not in their sole financial interests even thought HDR implementation may be in the best interest of the gsm / T network operator. Now if you are a CDMAOne operator the future appears to be a bit clearer. Even though some cdma operators are more progressive than others they all know the advantages they have over GSM and T and will play out their competitive hand appropriately. Starting with 1XRTT - which qcom is now calling 1XHDR. This is a significant event in the evolution to wireless internet data. We have already heard the "no brainer" decision for cdma network operators. The decision is a no brainer because of the incremental benefits they get for the relative cost. For the cdma network operator they: 1. spend a minor amount of money in infrastructure upgrade costs and 2. specify as a minimum requirement 1XHDR asics in all handsets. In return they get 144 kps or more data capabilitity and double voice capacity. They also get significant competitive advantage over any network that does not have this capability. HDR - 2.4 Mbs allows cdma operators another opportunity for incremental cost and lots of benefit. It may not be a no brainer today. For example No one was talking about 1XHDR in 1998 as the industry was busy implementing IS-95 A or B. Today 1XHDR is a different story - the cost benefit relationship is a no brainer. Next year will be a different story for cdma operators as HDR will provide them with potential new business opportunities. For some it will be a no brainer decision. I also expect news entrants into the market to take advantage of HDR. For GSM operators and T - HDR offers them the best migration path to high speed data. It could actually be a face saving way to rationalize using GSM and even hype the tdma aspects of HDR. However there are plenty of suppliers who do not want HDR to happen, so they provide the confusion for the market place. I am sure qcom has provided T and GSM operators with their migration plan, however the supplier ranks are causing plenty of confusion. When KYO comes into the USA next year the "talk" will stop and it will be time for action by those operators who have not taken steps for high speed wireless internet data. QCOM has signed Hitachi for HDR infrastructure. There are plenty of companies who will want to take advantage of the old guard. The entire competitive environment is changing. Video Phones, (fast)Web Surfing devices, mobile Internet are only starters. With cdma, operators got voice clarity, more capacity which lead them to see a significant financial model for a traditional and growing world-wide business. New markets can not be measured, so clarity regarding high speed wireless internet data networks and their transition will remain unclear. HDR is a path for high speed wireless internet services. It provides significant capacity and flexibility and allows a technical and appropriate business migration path. To take full advantage of HDR requires a new thought process. Fortunately there is now enough interest in HDR to make it a reality. It will happen in Korea and then in the USA. KYO will become a significant force in HDR as will other new entrants. Hope some of this helps Thanks Web.

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