Value Chain Stability and Control ...
Hi Skip,
<< For all intents and purposes QUALCOMM and their getting weaker by the moment value chain ... I couldn't disagree more. >>
You have that option, just as I have the option of stating what I'm observing, and different perspectives are healthy, would you not agree? I don't think that this board was established solely to simply cheer QCOM or QUALCOMM, but we have many serious souls dedicated to that task so we don't really need yet another.
<< In fact Qcom's value chain is getting stronger by the day. Their growing earnings are evidence of that. >>
I was hoping you would back up your opinion with some fact that would make me rethink my view.
Did you listen to the same earnings CC's as I did from each of them and review the financials. Growing earnings?
Lucent? Nortel? LG? Samsung?
Those are QUALCOMM's top 2 infra partners, and top 2 handset partners. They are, IMO, the 4 key members of the OEM side of QUALCOMM's value chain and provide extensions of QUALCOMM's own R&D initiatives.
Kyocera #5 in CDMA handsets? Sanyo #6?
Well Kyocera did reduce its telecom's loss QoQ and YOY and LG also reduced its loss, but along with Sanyo they are bleeding.
On the plus side of the CDMA2000 equation (but not the WCDMA equation) #4 Moto -- probably #3 now as Nokia ramps down-- looks like they finally have their CDMA handset act together.
I didn't see many other pluses this quarter, and over the course of the quarter I saw QUALCOMM increasingly at odds with the majority of the key members of its value chain. There is always going to be tension between the proprietor of a technology and its key value chain members, but what I'm observing is more than tension.
Things look a little better on the carrier side if you exclude Vivo, Reliance, and Unicom, but CDMA2000 is the dominant technology in only 2 major global markets: Korea and the US and otherwise healthy only in Japan.
<< All the FUD in the world is not going to stop the deployment of WCDMA/CDMA globally. >>
UMTS (WCDMA) is growing well. CDMA2000 is not. CDMA2000 handset deliveries as a percentage of global shipments peaked at the end of 2004. CDMA2000 infra deliveries are at an almost absolute standstill globally. Hopefully the beginnings of an IS-856 HRPD R'A' will change that and Pat Russo's waxing poetic about that, but Serge "the Merge" seems to be getting a tad squeamish.
You can squeal 'FUD' all you would like, but on balance CDMA2000 trends are not looking good to me at the moment, and that's affecting the value chain and will determine how those members prioritize resources going forward.
<< ... WCDMA/CDMA globally. Its the only game in town for developed markets globally. >>
That's two games. Two completely separate ecosystems.
You can play it as one if you choose, but I choose to play it as two, because when you put a 'W' in front of CDMA the economics for QUALCOMM change dramatically when you step outside the QTL division and into the other divisions where QUALCOMM is expending considerable R&D and SG&A, not only on a growing market but one where growth is stalled.
<< Nokia will pay up too. >>
Of course Nokia will pay, but you (or I) could never legitimately count Nokia as a valued member of QUALCOMM's value chain, and that's the topic you chose to address in the post that I'm replying to. They are simply a royalty payer to QTL and a pretty hefty one at that, considering that they have close to 35% of the global market for high ASP UMTS (WCDMA) handsets.
Ericsson, a different story, but as a member of QUALCOMM's value chain they are -- VERY unfortunately -- history. I would much preferred to have seen them as an ally, rather than completely focused on driving the GSM to 3GSM migration path. Even after their JV exited handsets (outside Japan), they supported virtually every QUALCOMM initiative. They stated neutral on the 1XTREME v. baseline framework issue. They supported CDMA450, GSM1X, and the standardization and commercialization of CDMA2000 for 2.1 GHz. ... History.
Ericsson and Nokia remain the healthiest performers in mobile wireless infra and handsets respectively, and on the UMTS (WCDMA) chipset side, TI continues to dominate and mop up, and Freescale seems to be improving their act. Broadcom and Infineon are in play, and presumably EMP is readying the U350 and U360 although they certainly have been quiet lately. QUALCOMM's largest chipset customer from a revenue perspective has opted to choose not one, but 2, alternative UMTS (WCDMA) chipset suppliers, and is increasingly focused on the GSM/3GSM ecosystem and is staying out of the LCH/ULCH CDMA2000 handset price wars. LG is solidly in house, but not only are they losing money but they don't look real solid on the UMTS (WCDMA) side for the upcoming quarters.
<< For all intents and purposes QUALCOMM and their getting weaker by the moment value chain ... If you believe that, I hope you have sold your qualcomm position. >>
Message 22652563
Nothings changed since then. Good to see QCOM and most others up today. I hope our friend Limtex's glass is a little fuller, and glad to see that yours is full. Heck. It's Happy Hour. I think I'll go fill mine, and you have a refill on my tab. <g>
Have a great weekend.
Best,
- Eric - |
