Once again for good measure.
From the current Businessweek:
QUALCOMM
Qualcomm Inc.'s (QCOM) bubble hasn't burst--it has exploded. Although the company's stock is up 284% for the year ended May 15, that's not what investors care about these days. Shareholders have seen Qualcomm's stock drop a sickening 65% since the beginning of the year. Much of the blame goes to Irwin M. Jacobs, co-founder and CEO of the wireless-technology pioneer. Qualcomm has excellent growth prospects. But Jacobs' often outlandish promotion led many to believe that Qualcomm would reap huge royalties because its technology would be used in all the world's cellular phones. That's looking like wishful thinking these days as competitors develop their own wireless technology
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Now, from a 9/96 WSJ article.
.....A lot rides on whether Dr. Jacobs is right. His dazzling promises for CDMA -- coming from a famed scientist who won a National Medal of Technology from President Clinton in 1994 -- steered many companies away from an already-established global standard widespread in Europe and Asia. Yet CDMA is more than three years late in coming to market, and it isn't clear it works any better than the existing standard. Dr. Jacobs is blamed by some experts for single-handedly putting the U.S. far behind in the global wireless-communications business, which analysts expect to be a $100 billion market within five years.
There is also a worst-case possibility: that CDMA doesn't work on the massive scale required, an outcome that would inflict billions of dollars of losses on the equipment makers and network operators that have bought into Dr. Jacobs's promises. That would cause more delays in the spread of digital-wireless phones in the U.S.; there are 16 million digital phones in Europe, compared with about 1.5 million in the U.S.
"They've got fundamental technical problems that they don't know how to solve," says Don Cox, a professor of electrical engineering at Stanford University. "There is no one in the business smarter than Irwin Jacobs, but smart guys make mistakes too." George Schmitt, president of Omnipoint Communications Inc. of Mountain Lakes, N.J., and a former chief executive of wireless giant PrimeCo Personal Communications LP of Westlake, Texas, says Dr. Jacobs "sold the market a lot more than he delivered."
Dr. Jacobs, no relation to the takeover artist of the same name, concedes that some of his CDMA promises haven't been borne out. The 63-year-old scientist defends his tactics, but does admit to some doubts: "Every other week you wonder, `Does it work? Will it get to market?'"
Whatever the final answers, Dr. Jacobs's crusade is an illuminating study of the challenges of commercializing high science. CDMA and rival technologies are numbingly complex; suffice it to say that by using radio spectrum more efficiently, they promise leaps in cellular capacity. Dr. Jacobs originally claimed that CDMA -- which stands for Code Division Multiple Access -- could cram up to 40 times as many calls onto a network as old-fashioned analog systems can. (Most cell phones in the U.S. use the analog system.)
Dr. Jacobs also said CDMA would have about 13 times the capacity of its main digital rivals, TDMA and its variant known as GSM. TDMA stands for Time Division Multiple Access, and the predominant companies that use the technology are LM Ericsson of Sweden and Lucent Technologies. Ericsson also dominates the market for GSM, which stands for Global System for Mobile communication.
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So after all the religious wars, at the dawn of a new century, a CDMAOne network remains 2-3x more expensive than a GSM/TDMA network with dubious voice capacity and quality advantages. Is it any wonder that China placed $1.3 billion in GSM orders last year. Ericsson alone got a $630 million GSM contract earlier this year that expands the current capacity of one region by up to 19 million subscribers.
The more things change, the more they remain the same. |
