Merlin,
Re: QCOM "BACK TO THE BASICS" (Merlin Suggests) - Gorilla status and implications
Another great post. Thank you.
<< Get out your calculators, class. Look at the CDMA subs growth beginning in 1997. Identify the trends and tell me you really don't believe there was a CDMA-for-voice tornado from about April, 1998 at least until the present. >>
There was indeed a "CDMA-for-voice tornado from about April, 1998 at least until the present." I am not ready to throw in the towel and say that the CDMA tornado is over and Main Street is approaching, but I think the tornado has evolved seamlessly into the CDMA voice and data tornado. [For lack of applications and terminals I don't think the data tornado has really begun].
cdmaOne/cdma2000 has a much more seamless migration path than any competing technology. cdmaOne starts life as IP based (ready for packet data) so essentially I think we have an ongoing tornado for CDMA voice and data, and we are just moving seamlessly from one to the other [GSM has always been voice and data (circuit switched), albeit at low data rates like IS-95-A (circuit switched) used here in the US since mid 1999]. IS-95-B which has been deployed in Korea for over 6 months and Japan is also voice and data but at medium data rates and shortly Korea will deploy IS-95-C (1xMC phase 0) with voice and data at even higher packet switched medium data rates.
GSM is moving to voice and medium data rates as well (GPRS) but it is hardly a seamless migration since the network backbone needs to be torn out and replaced and new handsets evolved in phases.
I digress. Back to the CDMA tornado (voice, or voice and data). We are witnessing a slow down in subscriber growth which we have always used as a key metric. Part of this rate of growth slowdown is to be expected as the user base gets larger. This year, rate of subscriber growth has been slowed by 2 unanticipated and temporary events: 1.) Korean subsidies 2.) Postponement of CDMA implementation in China.
I have a question for you (and the thread).
CDG is forecasting 67% CAGR of subscribers between now and 2004 end. This does not include China. Through that period they forecast a growth rate in every year that is higher than competing technologies, and consequently increased market share at the end of each year.
Is 67% CAGR sufficient to consider that a tornado remains in effect for CDMA?
If it is, and CDG's forecast is reasonably accurate, then the tornado remains in force. If it is not, then the tornado is subsiding.
Now having asked that question (and made that comment, I'll point out that probably a better metric for measuring growth of CDMA, is handset sales which drive Qualcomm revenue. It is a little more difficult to get at this metric, however.
Since handset sales are made up of replacement sales as well as new subscriber sales, as the subscriber base increases and the handset duty life shortens (because of new data related functionality), theoretically the CAGR of handset sales should be higher than the CAGR of the subscriber base.
Obviously in the end, we need to look at the growth rate of Qualcomm revenue and earnings.
Your thoughts?
- Eric - |
