The QCOM advocates continually "enlighten us" with their huge claims regarding the speed superiority of CDMA technology. But the cell phone industry is about business, business, business, not technology. Motorola and Ericsson should be the leading "beneficiaries", and important keys to the success of, QCOM's technology and royalty based business approach. Motorola's latest results, and forward "guidance" show that it's barely making a profit in its handset business, and is rapidly becoming a niche player. Ericsson's forthcoming earnings results are expected to be a continuing handset financial disaster - leading to further clamor for them to exit the handset business.
How can you have a successful business where only the technology patent holder makes money?
I would expect that Motorola and Ericsson's respective managements regret the day that they ever fell for the great technology promise of CDMA. I doubt very much that they are going to continue to risk capital in pushing 1x, 2x, 3x or nx CDMA technology, only to see big profits go to QCOM while their profits are marginal at best. Furthermore, the I-Mode model demonstrates that business success, and profits, depend on "always on" and easy links to internet sites, rather than who has the fastest uplink/downlink speed.
The worldwide move to WCDMA is gathering momentum. Even QCOM's chip business is being spun off in an effort to gain a foothold in the forthcoming lucrative WCDMA business. The next few years will continue to expose the impossibility of QCOM's and CDMA's position. I expect Nokia's earnings report for Q3 to be just one more example of the emerging world success of GSM and an open business model. |
