3G "Viability"
Jim,
<< Thanks for the DB report on 3G infra which as you correctly pointed out reflects less than 10% of the $58B planned for WCDMA infra being spent thru mid 2003. I stand corrected. >>
I knew you were good with numbers, and you would chew that one right up. <g>
<< why is the perception that “3G” is significantly late to market and plagued with numerous and unexpected technical problems the prominent story being told by the media? >>
Because the media is the media, and in actuality GPRS was almost exactly one year late to market and 3GSM WCDMA is now just about exactly one year late to market and IOT is proving even more challenging than what even conservatives anticipated. That is more than a perception. 3GPP achieved forward compatibility 6 months behind the original targeted schedule, and in actuality it was 9 more months before they reached the rev ('R99' March 2002) they are now implementing to, so while somewhat predictable, it is LATE.
That's the technical side. Technical issues work themselves out.
What is really far more serious than the technical issues, IMO, are the financial health of carriers and the unavailability of capital in a tough economic climate, coupled with a questionable demand for data services even if those data services were available.
In a healthy economic environment carriers would be rolling out network gear on a considerably larger scale than they currently are. The technology push would begin much quicker and much more aggressively than it will be.
<< Again, Dr J was “right on” when he stated in Cannes two years ago that WCDMA would not be commercially viable until 2004/2005 and very much chastised by everyone for speaking the truth. >>
Especially chastised by the market although I guess you are talking not about Cannes where Qualcomm acquitted themselves reasonably well in 2001, but about the stopover in London on the flip flop when as a byproduct of trying to play salesman, IMJ managed to take 20% off the valuation of Qualcomm in a single day..
Irwin Jacobs, president of Qualcomm, was so eager to predict that production of W-CDMA equipment will be delayed by as much as three years, that he hardly touched his smoked-salmon pillows over a lunch in London this week. He had flown there straight from the Cannes GSM Congress ... Jacobs predicts that W-CDMA infrastructure and handsets will not be available in volume until 2005 – three years later than expected. That would leave many European mobile network operators forced to re-evaluate their commitment to W-CDMA - Dawn Hayes, the 451 GMT Feb 22, 2001, 05:56 PM | ET Feb 22, 2001, 12:56 PM -
QCOM: 56-1/2, DN 10-7/16. ... It could be argued the Qualcomm's Jacobs was simply engaged in a marketing ploy to promote his favored CDMA-2000 at the expense of W-CDMA. But when you're dealing with a highly valued stock such as QCOM (45 P/E on FY01 earnings), delivering on future promise is critical, and 3G is the future promise for QCOM right now. - Greg Jones, Briefing.com, ET Friday Feb 23, 2001 11:56 AM -
We'll never know exactly what IMJ said in London. There were no direct quotes, even in FT, only paraphrasing. He has of course since explained, or attempted to, what he meant by "commercial viability" which he substituted for the "Commercial Availability" phrase that he and Paul had been using for the prior 100 days in their attempt to generate Fear, Uncertainty, and Doubt, about the "commercial availability" of 3GSM WCDMA.
Unfortunately he walked into an environment where in the previous 45 days capital markets had fallen apart, and carrier valuations had already been halved in that same 45 day period. It wasn't real sensible timing for the sales pitch he attempted to make in the manner he chose to make it, and it became a self-fulfilling prophecy.
In reality, Qualcomm's share price would be just about where it is today regardless of whether or not he had done that stopover. Capital markets have not recovered, infra isn't rolling, and GSM carriers are looking to get by with GPRS, while they weigh EDGE investments against WCDMA, and we sure can't blame IMJ for that.
When you see infra rolling, and a healthy Ericsson, you'll see a healthy Qualcomm share price wise, because it will signal the commencement of the meaningful royalty flow that is built into Qualcomm's share price. Meantime I expect we'll be trading in a range till then.
<< WCDMA was to be several years (3+) behind the technology curve vs CDMA2000 >>
WCDMA is in fact several years behind 1xRTT Release ZERO aka IS-95C (not an ITU IMT-2000 standard), an upgrade to ANSI-41 cdmaOne operating in 800/1800/1900 MHz, and according to Qualcomm and CDG an interim step to 3G (until they promoted it, or attempted to, in April 2000, to 3G).
<< Ev-Do networks being operational in Korea and being installed in Japan and elsewhere >>
An EV-DO network which even the Koreans, who adamantly refuse to dumb down 3G to Perry's and Irwin's Orwellian and hyperbolic standards, call 3G, supposedly went commercial in January 2002. "Commercial trial" would be a better appellation. First handsets (LGE) trickled into shops in August 2001.
With multiple 3GSM WCDMA carriers (6) now commercially launched with multiple dual-mode handsets commercially available that 3+ years behind the behind the technology curve you refer to has shrunk big time, if you get a little closer to apples/apples.
Now if we take IMJ's definition of "commercial viability" (10 million handsets per year) which he flustered and blustered about trying to define ("what I really meant to say") for a month or so after the London debacle before he went on his next FUD attack at CTIA, taking on EDGE ("I doubt that EDGE will ever see the light of day") we ought to see 3G 1xEV-DO "commercially viable" by what? 2005?
Nothing wrong with FUD. Lots of companies go down that trail pioneered by IBM. Some simply happen to apply it better and with more skill and subtlety than others.
As for hype, lots of companies go down that trail, also. Some with more skill and subtlety than others. Vendor hype, carrier hype, analyst hype, investor hype, and media hype have done caught up with every perp.
<< Ev-Do networks being operational in Korea and being installed in Japan and elsewhere. >>
Trialware for 1x-EV-DO in IMT-2000 core spectrum is supposedly due at KDDI, one of the 2 carriers, out of 115 licensees for that spectrum to select CDMA2000. Hopefully the gear will be installed and the trial commence on time, but the first successful 2.1 GHz CDMA2000 call of record, in laboratory, was made less than 2 months ago.
That technology curve advantage keeps on shrinking, and in fact in the major addressable market, CDMA2000 is behind the curve, and has yet to integrate voice and data.
One of these days Qualcomm and members of their value chain will work on inter-modal inter-frequency handoff for CDMA2000 GSM1X. That's scheduled to be tackled in early 2004. The technology curve advantage is not only reversed but QCDMA is at a significant disadvantage to 3GSM WCDMA.
ALL FWIW and JMHO,
- Eric - |
