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Technology Stocks : Nokia (NOK)
NOK 6.555+0.8%1:30 PM EST
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To: Puck who wrote (7778)10/20/2000 9:30:14 AM
From: Caxton Rhodes  Read Replies (2) of 34857
 
Puck- I assume Nok delays formally signing a 3G license with Qualcomm for two strategic reasons:

1) It delays the validation and complete capitulation that everyone who used CDMA will have to pay Qualcomm royalties. The primary benefit to Nokia is it delays the inevitable migration to cdma. For Nokia, the longer they delay cdma, the more they can milk out of their current customer base. They also figure that they have a good shot at the GSM/CDMA conversion infra/handset market so the bigger their GSM base when this starts the better for Nokia.

2) Nokia believes they can hold out for a lower royalty rate.

The risk for Nokia is that the longer they stay out of the CDMA market, the more they risk falling behind other CDMA infra and handset manufacturers. Just look at what happend to Mot when the world went from analog to digital.

In my opinion, it is highly unlikely that Nok will become a dominant supplier of high Quality cdma chipsets. The reasons are: 1) they can't seems to make a chip that competes with Q's chips, 2) they are not licensed for 1X (and are no where near making a 1X chip anyway), 2) they are not licensed to sell chips to others (they can only use them in their own products), and if they do sign up for a 3G license they probably wouldn't be licensed to sell those chips to others anyway.

CDMA is disrupting the wireless market and will disrupt it further, and if Nok waits to long to get in big, they will be left in the dust.

Caxton
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