Notes of TT’s Qualcomm Cowen presentation Sept 4 2003.
This was not a typical presentation, in this case the Cowen analyst conducted a Q&A with Tony.
No slides were shown during the presentation, but they were prepared and are available on Q’s website.
qualcomm.com
Slide info of note-
1. Mission statements- some changes?
+Expand CDMA market #G CDMA20001x, 1xEV-DO, WCDMA, GSM1x
+Drive replacement cycles with new products- Consumer Electronics Model
+ADD Revenue streams - BREW, QChat, gpsOne, Enterprise Applications
2. CDMA subs at 164M thru June 2003
3. MSM6xxx Segmented Roadmap
+MSM6025 new
+MSM6700 new 1x EV-DO and Rev D
+MSM6275 new HSDPA
+6 MSMs plus all 7xxx series include GSM/GPRS modes
4. WCDMA
+More than 6 vendors using QCOM UMTS designs
+Supporting Jphone with volume production
5. BellSouth launching BREW across 9 properties in Sept 03
6. India- over 4M CDMA subs as of July 03
7. S. Korea
+1xEV-DO 2M subs as of July, targeting 4M by ye
+SKT VOD MM service ARPU rising to $20
+Samsung introduces world’s first camcorder cell phone SCH-V310
+LGT, SKT & KTF to offer gpsOne this year
8. Japan
+KDDI 9.2M CDMA2000 1x subs with goal of 15.(M by Mar 04
....Planning launch of 1xEV-DO by ye
+DoCoMo 659K WCDMA subs, JPhone 66k subs as of July
+DoCoMo targeting 6M WCDMA subs by March 2005
Tony Thornley Answers to Cowens’ Christine Amacost’s (?) Questions -
1. 3G status-
Qualcomm sees 3G in two parts- CDMA2000 and WCDMA
+CDMA2000 was operational in 2001 in Korea and is now in Japan, U.S. and ROW.
+WCDMA
*DoCoMo leading engine now with DoCoMo March 2005 target of 6M subs
*Hutchinson green field deployments with 500k subs now and needing more phones
*Vod will be major operator with strong growth starting in 2005
2. What market share does Qualcomm envision in WCDMA.
+ 3 announced handset mfg now- Samsung, LG, and Sanyo now selling to JPhone
+ 3 additional handset mfg also using Qualcomm chipsets
+ Market share will be good, over time 50% of WCDMA market is very achieveable.
+ MSM6200 now in production with MSM6250 (GPS, MM) following
3. China and 3G licenses
+The sooner China issues 3G licenses, the better for Qualcomm whether CDMA2000 or WCDMA
+CDMA2000 licenses would be good as it will enable China to succeed in the export of such, . . .....WCDMA also.
+TDsCDMA in a couple of years could compliment CDMA2000 and WCDMA. Licenses should . ....not restrict which technology is deployed
+Hopefully late 2003, or early 2004 3G licenses will be awarded
+TDsCDMA will be royalty bearing to Qualcomm
*All major companies outside of China have licensed all forms of CDMA with each version .....bearing the same royalty rate
*Chinese companies have not licensed WCDMA or TDsCDMA as of yet
4. CDMA 450
+Primary in Eastern Europe with Russia being the biggest growth opportunity now spreading .....
....throughout the country
+China MII currently restricting deployment, believe once 3G licenses are awarded CDMA450 will .....be allowed
+Handset cost will not be an issue as there will be adequate volume
5. China Little Smart (fixed wireless), is that a threat to CDMA?
+Not a long term viable technology without mobility. All carriers will want mobility in the future
6. India WLL
+India’s WLL is really mobile , it is now limited by regulation to one charging area but calls can be ....forwarded. They are talking about convergence between WLL and mobile licenses.
7. WiFi competition
+WiFi is viewed as complimentary to 3G
+Evolution will bring about seamless experience by user 3G/ WiFi on a single device
+Qualcomm has 802.11 core already, not integrated on chipset due to lack of demand by carrier
+WiFi will not slow down adoption of 3G
+Carriers will use WiFi to off-load demand at peak time in high density areas.
+Users will not want to rely on WiFi alone after using EV-DO from Verizon next month is SD ...............and DC
8. China and pre-paid
+Don’t expect pre-paid to be big on Unicom’s CDMA network as it’s mainly for high end users.
+Q expects Unicom to meet their 2003 subs add target of 13M, but won’t be much upside from that
9. India and pre-paid / ASPs
+Reliance pre-paid will be big driver. Reliance is into all types of communications in a large way
+Pre-paid will result in ASPs coming down with $75 handsets.
2004 will be more of a decline without WCDMA volume to off-set on high side.
2005 will be more in balance with WCDMA ramping
+Their will be substantial growth in 2004 in lower end handsets vs the higher.
+ASPs now in the $190 to $200 range which is higher than expected due to slower ramping in the .................first half of 2003 in India and China. Q target was 10% reduction in ASPs this year, actuals are .....................much less (3 ½ % and now targeting 5% for the year)
+2004 is expecting to have lower ASPs for both the handsets and Q’s chipsets because of higher ...................proportion of low cost handset volumes.
10. TXN chipset competition
+TXN faces same challenges as LSI and VSLI and others in the past
*Software integration is difficult from low end to high end phones over many models.
*Rapid handset life cycle changes is a strong barrier to entry
+NOK will be a much stronger competitor in the low end arena
*That’s good in a way as it allows CDMA to compete more favorable with GSM prices
+Q is not aware of TXN being awarded any contracts for their chipset yet
+Lead time for chipsets is usually quoted at 10 weeks, but can be shorter
11. CDMA chipset market share for 2004
+Q expects to see some erosion.
+NOK will gain some share at low end
+Q’s growth is very good long term as market grows in 2005 and 2006
+NOK may be able to compete at low end by pricing their product lower
+Q’s customers will be able to compete very strongly at mid and high end markets
+There is no reason to believe that Qualcomm can’t achieve the same market share in WCDMA
....as it does in the CDMA2000 mid and high end products.
+In the longer term Q should get 50%+ as the WCDMA market shakes out over 2 years. Gradually .................Q expects to gain WCDMA market share
12. Are any of NOK’s tactics a surprise
+No
13. Number portability in the U.S.
+Not counting on any sudden change. However, over time that should favor CDMA carriers
14. Is 2004 more difficult to forecast than 2003
+No-
+Upgrade/ replacement cycle should continue to accelerate
+Camera phones are now a big driver, but they are still very rudimentary. As they get better with ................more features and video recording abilities they will continue to drive replacements
+WCDMA handset sales are expected to be less than 10M in 2004, but with very high ASPs
2005 will see WCDMA on the steep part of the S curve.
14. What is CDMAs share of the world cell market today and what does the future show
+Today 13% of subs, 106M handsets out of 450M (20-22% range)
+That share will grow in 2004
+There will be significant increases in future years as GSM converts to WCDMA in a big way. |
