<The monsterish trend in telecom right now is hugely negative for
margins. The industry is shifting from high-margin voice minutes to very low-
or no-margin data minutes. There's the huge trend of wireless substitution
where people are moving in large numbers from profitable wireline minutes to
much lower margin wireless minutes>
Good grief, nobody is even going to notice me mention Enron if people hold discussions like that.
That discussion is music to my ears. Finally, we are going to see viciously competitive low-margin competition in the mobile wireless world. That's when CDMA will be shown as the winner with high capacity and low costs and high speed and a great range of devices and rapidly improving functionality.
The GSM/TDMA/Analogue crowd will suffer greatly. Their spectrum and technology simply can't handle the 1000 minutes a month everyone wants. Not at any reasonable price and certainly not with the great new features such as SnapTrack, BREW, digital cameras, cybercerfing which only 3G CDMA can provide [with 1xRTT already there]. Of course, the GSM providers could install GSM1x and maintain some customers, but in a price war situation, that'll be problematic. But necessary!
Meanwhile, a service provider price and functionality war is great for QUALCOMM because subscribers will have such cheap minutes, megabytes and phones that they will think that another $50 [or $100] to get the latest ASIC with all the goodies on board will be a bargain. They'll upgrade their phones flat out [once a year]. QUALCOMM will be the only high-margin business. The rest will be wild, low-margin competition.
Leap should do okay too because they can do 1xRTT anytime. They have networks designed for capacity. They have the marketing already structured for a price war when measuring minutes is not what subscribers want.
They don't have coverage, but too bad. There are plenty of people who want a highly functional phone with free minutes [a small monthly fee].
However, we should not forget Enron, Global Crossing, Globalstar, that Savage guy on the QUALCOMM board and that Harvey used to be the President of QUALCOMM.
If that's too old-hat, then,
PRICE WAR!!
Mqurice
PS: We should mention debt too, [or it'll feel left out]. |
