Cha2,
re: QUALCOMM - China - cdma2000 v. "Other Wireless"
<< the Q "collapse" as you call it had little to do with China and much to do with the run up in the general irrational exuberance coming back to reality. >>
There was plenty of irrational exuberance, to be sure, but China was certainly a factor in the deflation of QCOM valuation last year. In February 2000 the news of China Unicom's intent to buildout a narrowband CDMA network buoyed the stock significantly, and several months later the confusion surrounding the postponement added to other very definable events to trigger a "collapse" larger than the general collapse of the wireless sector, which itself preceded the collapse of other sectors in Tech.
DDI's near defection to WCDMA started the downward spiral. Korean subsidy bans added fuel as did the defection of SKT and KTF in Korea to WCDMA for IMT-2000 technology choice. It also became apparent that cdma2000 was not going to make the impact one might have anticipated against a competitive variant of CDMA (that Qualcomm benefits directly from but does not control) and the realization that GSM was toast ... not.
The net net of all this was that CDMA hypergrowth came to a screeching halt and it is still stalled. This is bottom line to the significance of the Unicom deal.
CDMA is now established in what will be, as early as the end of this year, the largest single mobile wireless market in the world, and one of the fastest growing.
Hopefully this event will reverse a trend that started 17 months ago and saw what was for several years the fastest growing technology slide to number 4, behind IS-136 TDMA, GSM, and PDC.
<< Now China is reality and that means a sea change in the future with regard to CDMA 2000 worldwide. Only Europe which is hunkered behind its moat is "safe" for other 3G ... In the nonsense such as what is "in" and what is "out", CDMA 2000 is now in and any other wireless whatever its label is out. >>
I am having a hard time following the logic of this.
Specifically I am unable to see how we get from a (very significant) cdmaOne contract award to "other wireless" or "other 3G" being "out".
Perhaps you could point out what I am missing.
By virtue of contracts awarded yesterday, China Unicom, the number two mobile carrier in China with 22.7% market share in the GSM dominated China market, will install a second generation CDMA system that will presumably be upgraded (perhaps as early as next year) to cdma2000.
China Unicom states that the aim to have 100 million mobile subscribers by 2005, 40 million of them on the new CDMA network about to be constructed, which means that they plan to have 60 million subs (supposedly network capacity) on their GSM net. This represents an increase of about 45 million GSM subs in the same time frame that 40 million CDMA subs will be added.
Recently Unicom vice president Li Zhengmao told Reuters that "We think that, currently, the GSM network will reach its capacity of about 60 million subscribers in two to three years time," so it appears that over the short haul Unicom growth will be fueled more by GSM than CDMA.
As you know, I have often conjectured that China Unicom could be 1st the carrier to implement a CDMA overlay of a GSM net, but we are hearing no chatter about this, and the reality is that Unicom may be to CAPEX constrained in the short term to attempt it.
Meantime, the major carrier in China recently announced a major GPRS expansion of their GSM net:
>> China Mobile has said that it plans to spend US$16.3 billion over the next three years upgrading its GSM network. The bulk of the investment will be used to upgrade the network to GPRS. "We expected to launch GPRS in the first quarter in Guangdong, but it was postponed due to technical reasons," Li Zhen Qun, vice chairman and COO of China Mobile told an investment meeting, adding "But in the second half of 2001, GPRS will be put into operation,". The company plans to spend US$5.5 billion this year and US$5.4 billion in each of the following two years. Most of the investment will be funded from internal resources and not debt or a share offering. <<
... but we haven't gotten to 3G yet.
<< Only Europe which is hunkered behind its moat is "safe" for other 3G >>
China has postponed the licensing of IMT-2000 3G in the 2GHz spectrum till 2002 and China is a place where anything can happen, but China Mobile is one of the staunchest backers of WCDMA (and one of the largest GSM carriers in the world). They will probably do both UMTS terrestrial modes with some "China flavor" - but standardized - modifications to both. China Telecom is a wild card, but one would assume that the ministry would dictate cdma2000 to Unicom. It is a little early to attempt to call this one, IMO.
Looking at the rest of Asia & Pacific Rim:
Japan: 2 of 3 carriers firmly committed to WCDMA for IMT-2000 3G
Korea: 2 of 3 carriers firmly committed to WCDMA for IMT-2000 3G
Australia: Optus and Vodafone are firmly committed to WCDMA for IMT-2000 3G. Hutchinson Wampoa & Telstra yet have to decision make. Telstra is upgrading GSM to GPRS and cdmaOne to 1xRTT in current spectrum and Hutchinson Wampoa (allied with DoCoMo) is doing UMTS in Europe, but for their 3G licenses in Australia they are both unannounced wild cards, and become rather important decisions relative to the split between cdma2000 and 3GSM.
For these reasons I find it difficult to make the leap from the Unicom initial awards to "CDMA 2000 is now in and any other wireless whatever its label is out."
Strikes me as a bit of "irrational exuberance" <g> ... but then again, I am a conservative thinker.
Interested in your comments.
Best,
- Eric - |
