I think the global picture for second generation CDMA has dimmed considerably during the last six months. China has made a big commitment on GSM with its recent wave of network expansions. According to WSJ TDMA has won the current round in South America. I think it is slightly misleading that small trial networks are treated as major victories for CDMA: the fact that China is experimenting with CDMA does not alter the fact that majority of investments is being poured into GSM. Surely by now even the most stalwart CDMA proponents realize that Europe will forever remain free of QCOM's clutches: the third generation standard will be decided next month and that standard will be compatible with GSM and adopted by all Western European countries, this has already been agreed upon.
Korean situation is worrying for all western CDMA phone manufacturers. Korean companies will face a credit crunch, yes, but this will not prevent them for pursuing a relentless export drive to rack up US dollars. They simply have no choice. Telecom is the most profitable of the divisions of several chaebols: they will sacrifice cars, construction and semiconductors before they will give up the telecom expansion where so much of the future growth hopes have been placed on. Korea *has* to export its way out of this jam and CDMA is the one area where it doesn't face cut-throat competition from Taiwan and Japan. There is no reason to expect that the monstrous devaluation gains of won will be shortly reversed.
The weakness that a new technology faces in the time of depression is obvious: experimental systems are the first to get the axe when infrastructure spending has to be cut. Many of the Asian countries already have an expansive GSM network: if they start cutting back on telecom spending it will be cheaper to stop CDMA introduction than phase out GSM and introduce CDMA instead.
Moreover, I have seen no signs of CDMA phones catching up technologically with GSM phones. New GSM phones from Nokia hitting US next month will introduce infrared link-ups with printers and computers, five-hour talk-time with 137 gram weight, five lines of text on display, grouping of incoming calls in different priority categories, etc. Other novel GSM phones offer voice-dialing in under 100 grams, color displays, ten-hour talk-times, etc. At least four different internet/fax/WWW GSM/TDMA phones are being rolled out by spring. Where are the similar technological leaps and richness of choice in CDMA handsets that would convince the consumers that this system is superior?
It looks like there is very little variety in the market place. The hottest current digital handset company in the world, Ericsson, is pouring huge amounts of money into advertising and offers no CDMA phones. The best known brand in America, Motorola, is still mired in technological problems with its first CDMA phone. Nokia is going for a promotional blitz for the new 6000 GSM phone line-up in the US starting next month. The contrast to CDMA visibility is stark.
Now that the country where majority of the CDMA subscribers in the world is diving into an economical abyss the narrow base of CDMA is coming to haunt the technology. There will be major revisions in Korean subscriber growth estimates. The Korean companies will flood the American market with cheapoid phones now that their home market will not absorb the production capacity of their factories. This will destroy the profit margins for the whole sector (as Korean companies have previously done with other products). Much of the production capacity has already been built and the R&D expenses paid for - there is no turning back. Phones that were designed to make profit at 60% higher rate of won can be priced at pretty much any level to gain maximum market share.
Tero
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