Hi Maurice, I know I'm asking for trouble to reply... but what the heck. Note a liberal use of the "tongue in cheek" font here... just in case your browser doesn't support it.
You wrote: a lot of shareholders are happier for QUALCOMM to invest their money than to do it themselves. Ok by me if you want to go there... because QCOM's demonstrated skill is worse than a zero interest checking account with high fees! This based entirely on their own reported ability to realize returns from investments... So the wisdom of these shareholders is on par with the lemmings they otherwise resemble.
As you also point out, Q! has raised a lot of cash by offering shares to people. Little of their money has come from retained CDMA earnings so far. [my emphasis on the operative two words]. So true! We only need to figure out how much farther they have to go. First I note that for your reference to past growth [EDIT: this in reference to "with the first 100 million subscribers only just achieved having come from 1 million only 4 years ago and none a year before that"] to have any meaning, another 3 billion subscribers have to be born in the next 4 years. Therefore, the likelihood of this [example being relevant] is small, although it might be fun trying.
We can agree that CDMA is indeed in its infancy. The operative question is its actuarial life expectancy. Because as a prospective investment at $60 a slice, Q! must attract a further 45 Billion dollars of PROFIT in constant dollars before generating so much as one dollar in return. Let's be generous and say that Q has experienced 300 million subscriber years and attracted 900 million dollars in profit from its little foray into CDMA technology. With zero margin erosion that leaves a mere 15,000 million subscriber years until breakeven.
Which leads to the next point.
In your words: Counting the crowds waiting for CDMA is a fishes and loaves issue. How the heck can Q! feed the hordes [6 billion or so] waiting for a feed of CDMA? [bold emphasis mine again]. How appropriate you should mention food. Sadly though, your last sentence would more closely represent reality through the next few decades if you just deleted the "of CDMA"!! Bytes make for a poor meal and the sad fact is that more people will die of starvation, of thirst, of exposure, and of cureable or preventable disease than will ever talk on a cellphone, much less stand up and demand CDMA instead of some other technology. Your reference to "6 billion or so" waiting for CDMA overstates the practical case by something representing an order of magnitude. Particularly in the presence of dominant [but inferior, in the sense that VHS is inferior to Beta] substitutes.
Which means it will take Q some 25 years to accumulate the necessary number of subscriber years even if it captures its entire addressable market instantly and holds it. To break even. Of course if they continue to sell 10% more slices per year for 25 years that will lengthen the breakeven interval. And if margins and prices go down [they do not up] and if we ever get out of this recession and shareholders once again expect slightly more than breakeven... well, it is possible that shareholders could exceed their own actuarial life span before they get a fair deal... forget whether or not it is conceivable that an RF bit transport protocol technology has that kind of expected life span. Holy superheterodyne, bitman... we're stretching things a bit.
Which brings us to: "When we can do human cloning, we'll be even better off!" I think you will be closer to the point if you change the word "human" to "CDMA subscriber"! ROFL
Returning to closer to sanity, I note you wrote: Q! is out to make CDMA ubiquitous. A CDMA chip on every desk, in every... And a chicken in every pot. Q! and everybody else [verbal pun intended]. Sure this is what they are out to do. It's the holy grail. But the odds are that they will not succeed. The past year saw the rise and fall of bluetooth. Given that your teeth will likely fall before Q! provides shareholders profitable economic returns, plenty chance for other technology colors to show themselves in the meantime. While Christensen's innovator's dillema is likely to hoist Q! on its own petard.
Even so, you are correct to write To achieve ubiquity, they need to finance, design and build such things. [plus list of dubious merit if trying to make a point for success in doing things with other people's money. See my first point] Or in other words, in order to be successful they must be more like General Electric than GE. Which would be funny if it weren't so close to the truth.
And in reference to prospective shareholders Now, as they survey the techwreck, they see that in [insert business name here] there really is an income, there really is some cash in the bank, there really is demand and the technology really works and people really like it and ... Well, this weekend the same could be said for my son's lemonade stand. Only he doesn't stand a lemon's chance in a juicemaster of convincing seven hundred and fifty million shareholders to pony up $60 for a slice.
Asynchronicitatiously
John. |
