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Strategies & Market Trends : Gorilla and King Portfolio Candidates

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To: Uncle Frank who wrote (19765)	3/11/2000 11:22:00 AM
From: tero kuittinen	Read Replies (3) of 54805

I could understand a short-term delay. What I have trouble dealing with is a three-year hype attack about the enormous potential of CDMA in China. Even as GSM is poised to hit the 40 million subscriber threshold. This has been going on since 1997. I mean - enough already. The time to launch a nationwide, second generation network was in 1994-1996. The idea of setting up a competing second generation network in the autumn of the year 2000 makes no sense whatsoever. GSM has 20% market penetration in Chinese urban population; game over. There's no way the manufacturing, distribution, roaming and other GSM advantages can be overcome after a half a decade delay. There have been 101 different reasons for the CDMA delay since 1997. The real reason is the government commitment to the success of China Telecom, the leading operator with 95% market share. I think that misleading US investors about CDMA's potential in China is irresponsible. Market realities are what they are. Even if the Unicom network has the capacity for 10 million subs, the real challenge will be convincing consumers to switch, which at this stage is going to be a task and a half. It makes no sense to stress the capacity of the network in trying to evaluate the subscriber potential. Unicom's cynical aim is to hype the CDMA angle for all it is worth in anticipation of the Nasdaq IPO. In the meanwhile, Unicom has launched an avalanche of GSM network orders to compete with China Telecom in the real world. They apparently are investing massively in GSM in order to gain subscribers - and simultaneously dangling CDMA orders in front of American investors to put some sizzle into their IPO. It's a clever move - especially since they will probably get Motorola and Samsung to pay for the network equipment they are selling. I agree that CDMA does not need hyping - it's on its way to becoming a respectable second-tier standard with up to 20% global subscrber market share by 2005. So why the unrealistic PR bloat - why not concentrate on doable goals? Tero

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