My Outrageous Cellular Call
Virtually no one is willing to predict that CDMA will unseat GSM. Except me. - (It is the author. Not me! - BH :-))
FORTUNE
Monday, October 28, 2002
fortune.com
By Stewart Alsop
Hold on to your seat; I'm going to make a major prediction here. CDMA will unseat GSM as a worldwide standard by 2010.
Now that you've calmed your beating heart, you might wonder what geek drug I took. Take my word for it: What I'm saying is heresy in the world of cellular phones. I'm anticipating that within eight years the system that powers 70% of the more than one billion cellphones used today will be mostly replaced by a system that runs only about 5% of today's cellphones. People in Europe will rear back in disgust at how the Ugly American Technology Columnist is blinded by his parochialism. Wireless carriers, particularly ones that have recently installed GSM equipment (AT&T, Cingular, and T-Mobile in the U.S.), will shake their heads in disgust. Technologists from all over will just mutter, "Betamax," referencing Sony's costly VCR-era lesson that proven technical superiority doesn't make for global standards.
A little background: GSM stands for Global System for Mobile communications. CDMA stands for Code Division Multiple Access. GSM was developed years ago by a standards-setting body and is used by all the mobile-phone systems in Europe and Africa and in major countries in South America and Asia. CDMA was devised by a single company, Qualcomm, which is mostly owned by a single family that tends to generate controversy everywhere it goes. There are only a few CDMA systems on the planet so far. The biggest, in South Korea, has ten million users; a fast-growing one in Japan has over a million. More are on the way: Two vendors in the U.S.--Sprint and Verizon Wireless--are deploying national networks that have millions of users, and it looks likely that China will adopt CDMA. All that adds up to a lot of users and a very successful company in Qualcomm, which sells the chipsets that enable the systems. But virtually no one is willing to predict that CDMA will actually unseat GSM.
Except me. And here's why: For one, it actually works better. CDMA systems transmit clearer sound, which is one reason that Sprint--the pin-drop people--went with the technology. The system is also better suited for data. While most cellphones today are used simply for phone calls, new devices are rolling out that allow you to e-mail, browse the web, or play games. On CDMA systems, the first generation of these services runs on something called CDMA 2000 1X. On GSM systems, they employ something called GPRS. Forget the abbreviations: What early users are beginning to find is that CDMA networks are better integrated and smarter.
But then, Betamax worked better than VHS. Here's where the analogy doesn't hold: CDMA is easier and cheaper to install. That's extremely important for the cellphone companies, which have to spend billions building networks, then billions more upgrading them to stay competitive. It's CDMA-based companies such as Sprint and Verizon that seem to be making real offers of new data services to customers earlier than those companies running GSM. And where there are carriers offering new data services on GSM networks, the applications don't work quite as well.
CDMA could even end up disrupting the deployment of another wireless data service called Wi-Fi. Everybody in the computer business is excited by Wi-Fi (also known as the 802.11 standard) because it allows notebook computers outfitted with Wi-Fi chips to stay connected to a fast computer network, cord-free. Geeks have been crowing about how with Wi-Fi you'll be able to get the Net anywhere: airports, coffee shops, public parks, you name it.
Recently, though, I've been hearing that CDMA may be a better way to give computers fast wireless network connections. Wi-Fi might work well, but no one has yet figured out how to make money by rolling out ubiquitous service. Cellular networks are already everywhere, even reaching into elevators and parking garages. You can see where I'm headed.
CDMA makes for better phone calls and better data services. It is easier and cheaper for wireless carriers to install and upgrade. And it will enable those carriers to find new revenue streams by hawking high-speed data services. That's the kind of performance advantage that leads to a real competitive advantage. And competitive advantages have a way of overwhelming even well-established technical standards. I have eight years to prove myself right. |
