Bubba,
our posts crossed about the same time and we appeared to have addressed related issues independently.
I agree that most consumers really don't know enough to care about CDMA, GSM, or XXYY. Other issues will prevail. I myself jumped on the Sprint "Pioneer" offer when they first launched in San Diego which is no longer available. The main reason for me is NO monthly charge for life, plus a bunch of refunds amounting to about $250 that paid for the $199 phone cost, resulting in a net positive of $50 in my pocket. I have 3 phones in my household and my total bill last month was less than $10. The no charge first minute for incoming calls saved me a bundle. Though I like CDMA the best, if GSM or even analog offered this package, I would be compelled to choose it just on the economics alone.
In the features war, embedded technology in ASICs that are ever decreasing in size are under development in many camps. MOT bought a company earlier this year that has a flat screen project with some type of a magnifying device. Supposedly, your cell phone could display ant size characters which becomes a regular screen under magnification. QCOM has it share of projects and I guess the most likely next generation phone should have full email ability of some sort. Nokia has some embedded announcements just last week. The Koreans are all CDMA and are sinking big time money into this sector. I suspect that new generation PCSs in the next few years will have features far more attractive than direct connect and no roaming charges.
The outcome is not clear. What concerns me about Nextel is the lack of similar developments in place that I am aware of. MOT has a tendency to rely on past technologies a little too long, such as the pagers and powerPC semi products. As far as digital cellular is concern, MOT is behind the Europeans when it comes to GSM and behind QCOM in CDMA. They are rushing like mad to catch up and may not be focusing enough on iDEN. Nextel is basically a service provider like Sprint. Who is Nextel going to count on for technical inovations? Sole source, especially when it is MOT, always concerns me.
You mentioned ARPU. This is another area of concern not that I think it is not justified. Undoubtedly, Nextel is enjoying a high ARPU because of business customers. What if next qtr the ARPU drops from the $70 back to $65? Is the street going to interpret that as Nextel losing ground to other providers?
The first to market advantage is only significant if they can totally dominate. I don't think Nextel is dominating in any of the market they serve.
As for the satellite stuff, it appears that we came to similar conclusions. I placed my bets on Loral also. Iridium stock was too expensive right from the start. If I own Loral and QCOM, I already own some Globalstar so why duplicate. Do you know how Nextel fits into this arena?
Having said what may be considered negative comments about Nextel, I conclude that the immediate future still looks bright. The analog market was huge and needs to be replaced by digital. Supply, especially handsets, is hampering this transition. Nextel, CDMA, GSM etc all seem to have a lack of inventory. There is going to be enough business for all, eliminating the likelihood of any price wars any time soon. If the analysts don't place unrealistic expectations on subscriber growth, Nextel, as is the case for other providers, are all going to look great every sequential qtr. Nextel has stated that 2 million is the break even point a few months ago. It should be even less now because they were using smaller ARPUs back then. Cash flow positive for 1998 is certainly within reach. At which time, it may be easier to quantify the value of Nextel.
Freeus, I am glad to see your post. Obviously, others thought that I was launching some personal attack against you which of course is not the case.
Ramsey |
