Frank,
<< Seems clear to me. Haven't they already conceded that they can't bypass Q IP by licensing it? >>
Absolutely. They have all signed licensing agreements with Qualcomm. Royalty payments to Qualcomm are simply a cost of doing business. On with the show.
Same guys determined they couldn't bypass Motorola's IP (mostly analog AMPS stuff) back in 92 when they were bringing GSM to market.
<< but I suspect the intention is to keep potential wcdma carriers from bolting >>
Potential WCDMA carriers aren't about to "bolt" anywhere. Switching costs are too high and any QCDMA flavor offers too little. Most potential WCDMA carriers have decided that at this point in time the last thing they need is to incur the cost of any flavor of cdma and that GPRS is perfectly satisfactory for developing initial demand for wireless data. They don't need cdma yet and they don't have a business case for it, and capital markets are dry for telco anything.
We'll probably see 30 to 40 commercial 3GSM WCDMA launches next year, but for the most part they'll be relatively small scale.
GPRS is the volume wireless data game for the foreseeable future with some EDGE on our shores.
<< I expect cdma2000 to pick up some serious market share this quarter >>
Market share against what?
This is the market share that creates the addressable market for QCDMA anything and the "local gorilla" power that Qualcomm hopes to capitalize on if they can get their value chain out of hock:
QCDMA Market Share GSM Market Share
% of all % of digital % of all % of digital
Q3 2002 End 12.4% 12.8% 69.2% 71.3%
Q2 2002 End 12.3% 12.7% 68.6% 71.0%
Q4 2001 End 11.7% 12.3% 67.0% 71.0%
Q2 2001 End 11.5% 12.3% 65.7% 70.6%
Q4 2000 End 11.5% 12.7% 64.4% 71.4%
Q2 2000 End 11.9% 13.9% 56.6% 66.1%
In 27 months GSM wireless market share has increased by 22.3% (12.6 percentage points) while CDMA wireless market share has increased by 4.2% (½ of a percentage point) and in those same 27 months GSM has increased digital market share by 7.9% (5.2 percentage points) while CDMA has declined 7.9% (-1.1 percentage points).
Take a look at the net margins of the 3 members of Qualcomm's value chain (asterisked) that along with Qualcomm announced on June 4, 1997 that they would team to produce the third generation standard now known as cdma2000 and have it in commercial operation in 2000:
TTM Net TTM P/E
Revenue Margin 11/4/02
Nokia $29,901 9.5% 30.4x
Motorola* $26,576 -14.7% NM
Alcatel $19,110 -26.2% NM
Cisco $18,915 10.0% 48.7x
Ericsson $18,354 -8.5% NM
Lucent* $12,321 -96.0% NM
Nortel* $11,496 -44.9% NM
L-3 $3,411 5.2% 21.8x
QUALCOMM $2,817 4.4% 241.2x
How deep is doo doo?
Motorola's OK cause their a player in GSM/3GSM handsets. Nortel does some GSM/3GSM infra and does it reasonably well so that'll float their boat a bit. Lucent? The key member of Qualcomm's value chain and far and away the largest QCDMA infra provider. Maybe Qualcomm should buy em? Market Cap is only $4.6 Bil compared to Qualcomm's $28 Bil.
Best,
- Eric - |
