Nice report, but I have two disagreements with it:
W-CDMA phone unit (2002-2005) 15 48 125 169
I have trouble buying this. The Japanese W-CDMA rollouts, as we know, start in 2001, while most of the major W-CDMA rolouts in Western Europe and in other developed parts of the world (i.e. Australia, Hong Kong, Singapore, etc.) are going to get started by mid-2002. Sure, in 2001-2002, the rollouts will be limited to major urban areas and the first buyers will mostly be early adopters, but knowing the pace of network upgrades, by mid-late 2003, the rollouts will have picked up considerable steam, with most urban areas blanketed with 3G service; and by late 2003, with manufacturers like Nokia, Siemens, Sony, etc. devoting greater resources to 3G handset production than GSM/PDC handset production, it's hard for me to believe that carriers such as DoCoMo, Deutsche Telecom, and Sonera will be seeing greater sales of GSM or PDC handsets than sales of W-CDMA handsets.
Yet somehow, with nearly 1 billion handsets expected to be sold in Qualcomm's FY2003 (ends Sept 30, 2003), and with over 70% of these sales expected to come from GSM/PDC/W-CDMA operators, this guy only expects 48 million, or about 7% of the sales made by these carriers, to come from W-CDMA handsets; and well below 20% in FY2004? That's a little hard to believe, to say the least.
Now onto the next item up for criticism:
ASP, CDMA phone (2000-2005) $ 210 179 152 140 135 130
Last quarter, as I'm sure all of you know, Nokia made huge price cuts on a number of its older models in an attempt to gain market share. Yet amazingly, in spite of these price cuts, they reported that handset ASPs were basically flat on the year. Now it's widely expected that with Nokia having released a number of new models this quarter, ASPs are going to increase annually. Likewise, although Qualcomm will undoubtedly report a decrease in CDMA handset ASPs for this quarter due to the subsidy ban, last quarter, they still reported ASPs to be in the $200 range.
What's important to note here is how little the average phone's changed in the past year. The additions, such as WAP browsers, voice dialing, and predictive text, have been minimal at best and did little to add to the cost of making a phone. Now, going forward, we can expect phones with things like color screens, PDA software, MP3 support (note: I've been pleasantly surprised to see sub-100g MP3 phones out there), GPS, Bluetooth, streaming video, videoconferencing support, end-to-end voice recognition, digital camera support, broadcast TV reception, video game support, and of course, packet-switched broadband internet connections. Also, since these features will open up a diverse array of additional revenue-generating services that carriers can now offer to their subscribers, they'll be willing to offer larger subsidies for handsets that support such features. Yet ASPs are now expected to collapse? I suppose that some people still haven't figured out that the handset industry's a little bit different from the PC industry.
Eric |
