Hi Quincy,
I'm not sure I'm following you on this "If all batteries are equal, CDMA will last longer than GSM". Obviously all available CDMA phones and a couple in the pipeline (Q-phone and Nokia) have very disappointing battery times for the weight of the phones. Philips is currently introducing their 93-gram GSM phone. There are entire product categories on the TDMA side that simply don't exist in CDMA (sub-100 gram phones, smartphones, 500-hour standby time phones...).
It's very hard to sell consumers promises of cool -99 products in -97. Consumers don't know what CDMA is: they only see the current quality gap . GSM will have quite comfortable lead in phone quality for the next two crucial years. That's what counts. Motorola's much-expected MAP is slated to arrive before Christmas, as is Ericsson's answer to Nokia 9000. That makes three smartphones competing in GSM, generating headlines and consumer interest versus none in CDMA next winter (unless you know something I don't). New York Times' recent big article featuring Nokia 9000 was pretty impressing. Wall Street Journal called the phone "a hit". The new GSM products are capturing people's imagination all over the world. Looking at just 100-150 gram class, there's no way someone would look at Q-phone twice if they have a choice to pick up a Genie or a 788 instead.
Bad marketing alone is enough to sink a product line. And let's face it, when it comes to creating brand-awareness, Qualcomm comes up short. How about those creepy alien ads? Must appeal heavily to the important middle class families. In addition, they have made zero headway in differentiating CDMA from its competitors. We're a long way from "CDMA Inside" and the marketing budgets of AT&T, Microsoft, Intel, Ericsson, Nokia, Sony and Philips dwarf Qualcomm's milk money. These giants have big plans for GSM in USA, and unlike Europe, America is still up for grabs.
The cavalier attitude towards handset manufacturing in this group just floors me. If only you knew just how hard it is to succeed in this business. Excellent companies with deep pockets and lots of consumer product know-how have failed to succeed in digital phone selling biz. Motorola had 8% market share in its home American market in digital handsets in 1996 against the Nordic companies' 89% (Dataquest). Qualcomm has faced no competition so far, yet people seem to contentedly repeat that "there's enough room for everyone". This is hardly a given. A couple of prioduct glitches or a lawsuit mess during the critical early months of competition can have serious repercussions. In Europe, the big two in digital handsets have been hogging more market share despite rapidly expanding markets; there simply is a trend towards household names in mobile telephony against which it is very hard for other companies to fight.
Handling triple digit growth is extremely hard even for established companies like Ericsson and Nokia. Estimate growth wrongly and you're stuck with warehouses full of unwanted product or empty shelves. And Qualcomm is supposed to create a full line-up of new phones (the older two models will hardly be competitive by Halloween), come up with a working marketing strategy built from scratch, handle the logistics and pricing just right and all the while running its other businesses (also at a critical stage). And with no prior experience in selling consumer products. It's possible, but it is not probable, let alone certain, as depicted by certain individuals.
Somebody here said that Qualcomm already has 60% of Nokia's handset production capasity. The latter company is nearing 24% in global market share. Looks like somebody bet the ranch on handset selling success... before any experience of head on competition in the sector. I think one can understand why Wall Street has been dumping the QCOM stock against one of history's hottest bull runs on mobile communication companies.
Tero
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