QCOM is easy to explain. They make money by selling chips for cell phones and other wireless appliances. They also collect royalties.
The only dense part about QCOM is the disruption between GSM and CDMA interests. Is 3G a CDMA or a GSM product? It is clearly both since the RF equipment is CDMA and the baseband equipment is GSM. WCDMA will assess a CDMA royalty for QCOM and a GSM royalty for the GSM Guild.
In response to Gilder's comments, why would he make such a stupid suggestion that OFMD is a competitive threat to CDMA has no support from system operators. Clearly, the standards for 3G CDMA have already been established. CDMA2000 & WCDMA have the full support of the ITU standards process. If & when OFMD becomes a 4G standard after 3G CDMA is installed, maybe QCOM should paying closer attention to royalties. However, it would not be in QCOM's self interest to negotiate a royalty bearing contract with 50 companies for 3G CDMA and then turn around and lower them because of the threat of competition in 5 years after 3G CDMA is commercialized.
I would guess that Gilder's point on royalties underlines his disbelief that QCOM will be able to collect royalties on such a massive scale. Gilder is into the concept of Say's Law which says supply creates demand by lowering prices. QCOM did not get to it's point of success by lowering prices, they got their by a combination of unbelievable technology and lower prices.
Personally, I think that QCOM should start charging higher prices for CDMA ASIC's given the advancements they make for E911, multimedia, MPEG 4, MP3, Internet Launchpad, BREW, etc... The convergence of GSM, WCMDA, GPRS, and CDMA2000 shold start a global bidding war for QCOM's ASIC's within the next 12 months. |
