QCOM/MOORE:
To: Tom Ardnij who wrote (4802)
From: LindyBill Wednesday, Aug 11, 1999 12:11 PM ET
Reply # of 26874
MORE FROM MOORE!
I got this email from ozeir,
Subject:
MR MOORE new response to Qualcom's Gorilla-hood!!!!
Date:
Wed, 11 Aug 1999 7:42:15 -0700
OK finally I got a better response out of MR. MOORE!
Here is what I wrote on his email forum to get a better response from him:
Ladies and Gentlemen,
All of the topics we have been talking about so far this year have been
educational and informative. But when it really comes down to it, no new
company discussed so far has been elected as a candidate for gorilla-hood.
MSFT, CSCO, and INTC are still the big three big gorillas and they are
showing their strength in the blood bath that is going on in the jungle of
the ".coms" this summer.
So why are we wasting everyones time discussing companies that are not
gorillas at this point. According to the book we should only invest in
companies that are well known gorillas. And in the past Mr. Moore and others
have been kind enough to tell us that a certain company does not have the
potential of becoming a future gorilla.
The only company that has recently become a gorilla is Qualcom.
Here is why:
1) The biggest growth in technology in the next 5 years will be in the
telecommunication area.
2) Wireless technology is the hottest sector.
3) CDMA -- or Code Division Multiple Access -- is expected to power the next
generation of wireless devices. It uses the radio spectrum more efficiently
by wedging fat streams of date in the empty spaces between conversations.
Those data streams can carry everything from email to huge files from the
server back at the office.
3) CDMA is the fastest growing standard in the world.
4) Only CDMA has future broadband wireless modem potential.
5) Now, every company that uses CDMA in wireless chips or handsets has to
pay Qualcom a royalty. The potential windfall is staggering, if you assume
CDMA will be the standard for "third generation" wireless. And many analysts
do.
6) QCOM currently makes 90% of CDMA chips sold worldwide (Intel of the new
wireless world).
7) QCOM gets royalties for every CDMA Chip made by licensees (MSFT of the
new wireless world).
8) QCOM is in the business of making wireless phones, a new phone coming out
this fall, the first, that has the capabilities of a palm pilot, internet
access, emailing, and wireless phone combined into one device.
A new phone named the "thin phone" is already out that can be hooked up to a
lap tops and used as a modem for access to the Internet. (Dell of the new
wireless world).
9) QCOM was recently added to the S&P 500.
10) QCOM has $1B in cash.
11) They are in a joint venture with MSFT to built the standard operating
system for the future of wireless systems.
12) QCOM has stake in few bright companies like Globalstar and few others.
Ladies and gentlemen the CDMA wireless tornado started in early 1999 and I
really feel that this company with its thousands of patents is a gorilla!!!
In the past Mr. Moore did not feel that this company has the potential of
becoming a gorilla but he did admit that he did not have a lot of knowledge
in this area.
I love his book but with all do respect to Mr. Moore, I also think that his
strength is in discussing software trends.
I am not a techie nor am I trying to promote Qualcom. Please do your own
homework and please share your thoughts with us. Thanks to the posts from
some knowledgeable people on this board early on, I was able to find the
mighty Q sooner this year.
In five years from now will you hate yourself for missing out on a great
gorilla?
So lets not waste time and discuss the new gorilla with its bigger potential
than Microsoft!
And here is his response, please post it to the SI:
Gang,
I think the discussion of Qualcomm sounds very gorilla like. The proprietary
technology, I believe, comes from GSM3, the next pan-Euro wireless standard,
incorporating CDMA. SIgnificant barrier to entry would be the patent
position. If I understand the exchanges, Ericcson validated Qualcomm's
patent in return for getting a sweetheart deal on the hardware rights
(someone please confirm). Long-term CAP would come from the more or less
permanent embedding of CDMA in all future wireless protocols (kind of the
way DOS is embedded in all versions of Windows). The analogy might be to
Rambus which has proprietary architectural control over the DRAM
architecture thanks to Intel's mandate.
So why isn's Qualcomm trading through the roof? My guess is right now that
there is still time for competitors to find a way to wriggle out from this
coming gorilla game. I don't think the way out is visible at this time, and
so the stock may be undervalued (just because there is time doesn't mean
there's a way). This is smelling large primatish indeed.
Geoff
Geoffrey Moore
Chairman, The Chasm Group
(650) 312-1940
Venture Partner, Mohr Davidow Ventures
(650) 854-7236 |
