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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting

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To: Art Bechhoefer who wrote (32950)	2/28/2003 10:35:14 AM
From: Jim Mullens	Read Replies (1) of 197243

Art, Re:>>” The most successful way to deal with a strategy geared to hanging on to older technology as long as possible is to price the new technology low enough to discourage continued use of the more expensive older technology. This seems to be what QUALCOMM has been doing in China through the use of an extremely low royalty rate for domestic sales. A couple of years ago, I suggested that it might be to the advantage of QUALCOMM to reduce royalty rates for all licensees. Or they could reduce the rates for a period of one or two years in order to motivate laggards to switch. Personally, I'd like to see royalties of two percent or so in a market with 80 percent CDMA and 20 percent GSM, instead of the reverse. “<<< I believe your strategy might work in countries that are open to competition or where the GSM incumbents don’t have such a strong foothold. I doubt if even a royalty free use of CDMA in Europe with Qualcomm still holding the architectural control of the CDMA technology would have made any difference in the adoption of CDMA. The GSM folks (MEN) had a great enterprise going that virtually locked everyone else out with their cross-license agreements. Qualcomm and CDMA would have and does eliminate their tremendous advantage by leveling the playing field and therefore even without the 5% (approx) royalty rate would not have succeeded (IMO). Also, being a newer, richer, and more elegant (complicated) technology without the scaling advantage of GSM, 2G CDMA even at a 2% royalty rate would have resulted in higher priced handsets on average than their GSM counterparts. However, the whole ballgame changes with 3G CDMA 2000 as the good guys have the scaling and royalty advantage. JMHO- jim

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