Dr J words from Bloomberg
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Dr J Words only
Thank You
Well let me state first of all I think the issue in Korea is still to be decided as to which way the companies go, which one's technology they use. But that is a new frequency band, a 3G frequency band that is yet to be awarded. In the existing frequency band they continue to use our existing CDMA technology and indeed they are the first to upgrade to 3G technology in the existing band. SK telecom has announced they will be providing the 1XMC technology roughly in Oct of this year and KT Freetel in roughly in Nov of this year, so the very first third generation technology will be based on our 1X technology will be available this year and we will be able to see the impact of that great increase in voice capacity and data rates at the end of this year in Korea. Now in the new frequency bands, which have yet to be awarded and built out etc, in either case they will be using CDMA, so which ever flavor they use, they will be using our CDMA technology. We are quite pleased with fact that most of the world will be going with CDMA and that can only benefit us in the long term.
Right, any commercial CDMA system for mobility has to use our technology and we have licenses with most of the potential manufacturers Many are upgrading those now to 3G, many have already done so.
Well, first of all, from the Qualcomm point of view, the royalties will the same regardless of which flavor of CDMA is used in the new frequency bands in the future so that is not a great issue. With respect to the chips, we currently have the greatest expertise in manufacturing CDMA, WCDMA or DS or whatever you wish to call it, or multicarrier technology are CDMA , it is not the TDMA used in GSM and it is completely completely different from that. It is CDMA. and we have the greatest expertise in CDMA chips and we are extending that to all flavors of CDMA and so those small changes in the different flavors, are ones that will be accommodated in our chips. we expect that our expertise will in fact, assure that we provide a highly superior chip and therefore, we end up with an interesting percentage of the market. The interesting aspect of that is that we go into 2003 and 2004 that much of the world in going to CDMA in the new frequency bands and therefore the growth in the CDMA market is going to be HUGE and we expect to capture an interesting part of that market.
We expect to be selling a significant part of the CDMA chips, we think that there is great pressures in Korea, whichever flavor they go with, to have some part of their chips to be locally manufactured as opposed to manufactured or bought from other companies. so we think that over some time there can be some decrease in our percentage, but the market is going to grow much more rapidly. Which flavor it is I don't think that will be a great issue.
It really depends on the time period etc, probably on a revenue point of view it may be in the order of 60/40 chips to royalties and licenses, on the bottom line it probably in a much larger percentage on the royalties side of things.
First of all the main change for Qualcomm is a great one, which is the fact that they are going to change to third generation this year and that will give all CDMA operators worldwide a huge advantage over the next couple of years over other operators using other technology. They will have the high data rates, the higher capacity, all the advantages of CDMA. Then as other operators and manufacturers begin to introduce CDMA that only grows the market. So we see that as a win win situation. The flavor is not that critical. If you ask me which one I think would be the greatest advantage to them at this point, given their experience of using the 1X technologies and looking at the greater efficiencies of 1X technology, both 1XMC and our new HDR technology, I would say they have a great commercial advantage using those technologies. But from our own revenue and profitability point of view, I don't think it is that critical. There is an issue that has been raised about roaming world wide. I think the roaming issue will probably be taken care of before we get to third generation in that we are already providing the capabilities. In many cases manufacturers are providing multi band phones which operate in the cellular, PCS and will operate in the new 3G bands when they become available. Secondly, they will be multi mode so they will not only operate in the different flavors of CDMA , which is relatively straightforward, but probably also with operate with the TDMA mode used by GSM today, so you will see the multi mode phones which will allow worldwide roaming Finally the two networks that exist in the world today, one on which GSM is based, GSM MAP and one which TDMA and AMPS is based, ANSI 41, those two are being connected now and so the roaming support because of having two different networks, that issue will go away. Finally looking forward, my own belief is that most of ,certainly of the data and most of the voice traffic going out in the future will go over the internet. and those are common network protocols and so the issues of the differences will become even easier to deal with. But I expect the roaming worldwide will become just more and more generally available for those that wish it, because the multi band, multi mode, and multi network issues are now being dealt with.
I think the most important thing to QUALCOMM is that people move to CDMA as quickly as possible. My major concern would be that in introducing a new technology, such as WCDMA, the risk is a bit higher, the delays could be there and therefore we would see a slight delay. That is a risk, but as far as people moving to CDMA , that is only a benefit from our point of view.
Well in existing bands, I think you will see very rapid growth now in CDMA in the US as we go more and more to digital. I think we are being to see a market develop and by 2002 will be quite large for internet access wireless and that, by far, favors CDMA I don't think that there is any competitor that is creditable at this point. And so I think that means that CDMA growth will be accentuated in the existing frequency bands over the next couple of years. Then as new frequencies bands become available, in the Third Generation technology, where most people will be using CDMA, that growth will even further accelerate. And so we see that the increasing market for wireless internet access greatly favoring CDMA. And the fact that everybody, or almost everybody, in the future will be going to CDMA in the new frequency bands means that it probably makes a lot of sense to go to CDMA earlier than later.
By 2002, I think the Third Generation will still be a minor factor and so it is the growth of CDMA in the existing frequency bands though 2002 that will guarantee the billion, billion plus subscribers and we think that CDMA will continue to increase it's market share. Then, as we move beyond 2002, into that second billion of users, just about everybody will be adding new capacity, though CDMA and so the growth will be even faster.
Again, I think the landscape is positive, I am disappointed that there is has been a delay in China, with China Unicom delaying their move or their use of CDMA 800 MHz spectrum. But I think that is temporary, there has been a debate as to which form of CDMA is introduced Whether it is the 95A is mostly used throughout the world and 95B which is being used and providing the 64 kilobit service in Korea and Japan right now or the 1X technology is being introduced into Korea before the end of this year and the US throughout next year .And so which brand to use, I think that causes them some confusion. Some of their manufactures prefer the existing technology because they were already very close to be able to supply it. Others prefer to wait and bring up their own capability to supply 1X technology. So that is still getting ironed though. Again, China will be going CDMA as well as is the rest of the world, and I think it will be happening sooner rather than later.
Well, in the chipset side in CDMA side, there are not any significant competitors at the present time, but we certainly expect there will be, we see Intel and TI. As far as merchant suppliers focusing a lot on the mobile market, we see vertical manufacturers , that it some manufacturers that are trying to develop and use their own chips as to continue to take part of the market. But I believe that more and more the advantages of going with a powerful chipset, in particular, using the CDMA expertise that Qualcomm has, will convert more people to using chips they buy, rather than developing themselves and therefore, even further expand that market.
I think there is some confusion in the marketplace again. The Korean companies are moving to CDMA adding 1X capability in the existing bands, they are not changing that at all and over the next few years we think that is going very rapidly, and then they are going to which ever flavor of CDMA they select. I don't think that is decided yet, but that is not a great issue and so I think that there is confusion thinking that the existing bands were being converted to some new technology. That is certainly not the case. It is being converted to our 1X technology that will happen rapidly and, I think, cause great growth. And so that is positive. And there is the ongoing confusion in China as to when they will move ahead and it has been delayed from the original times so obviously that has hit our stock also. But what I think that what people are losing sight of is the fundamentals, Wireless access is going to be a major growth market. CDMA is by far, the best technology for providing that, and over the next few years and almost all of the new additions on the new frequency bands,certainly that will be with CDMA and all that benefits QUALCOMM. |
