Ruffian:
One of the feature articles in the February print version of Red Herring is entitled "The China Syndrome - Qualcomm's eight-year bid to enter China has become a matter of survival" (by Dan Briody). The overall tone of the article is negative/critical, main points made are:
(1) Without China, QCOM is dead.
(2) If China goes ahead, royalty rates will be 2.5% vs the 8% QCOM collects elsewhere.
(3) QCOM is involved in dangerous politics in China, has no negotiating leverage, and has played into China's hands.
(4) There is no guarantee that China Unicom will go ahead and build the promised CDMA network, and even if they do, there is no guarantee anyone would use it, since China's 69 million cellular users are 99% using GSM.
(5) GSM is the network standard in "Europe and other parts of Asia", countries like Japan are migrating their networks to 3G, but they are using WCDMA, the "natural upgrade path for GSM".
(6) Citing Matt Hoffman of Wit Soundview, QCOM will receive as much as 3% points less royalties from WCDMA than from CDMA 2000, regardless of what Dr. J claim, because Ericsson and others will collect their share.
(7) AT&T's deal with NTT DoCoMo calling for a GSM network in the US for AWE and is a major defeat for QCOM.
(8) "With no hope of establishing CDMA or CDMA 2000 in Europe, and its US market share threatened" (by AT&T), and many other countries already building their 3G networks, "Qualcomm may have already missed the starter's gun", and therefore see (1) above. Qualcomm has "gambled its future" on the "risky proposition" in China.
Before anybody takes me to task for this post, I'm simply reporting what the article says. I'm not sure if Briody has an axe to grind with Qualcomm, if he just has a biased view of the wireless world, or if he simply interviewed a bunch of GSM proponents and doesn't really have any real facts.
I just received my copy of Red Herring and I don't know when it hits the newstands, but it could have a short term negative effect.
David T. |
