Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 172.29

-2.2%

Dec 17 3:59 PM EST

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To: Bruce R. Schlake who wrote (6855)	1/6/1998 5:43:00 PM
From: Arrow Hd.	Read Replies (2) of 152472

I am at a disadvantage since I really dont follow qcom's products but maybe an example that is analogous would help. With computer systems you have two basic levels of software separated by the "external user interface" which is an imaginary line that separates the software that resides above the EUI (OS, utilities, applications, etc.) from software that resides below the EUI (microcode, firmware, LIC, etc.). Below the EUI, software is part of the hardware design and is covered under hardware contracts and business practices. It is not snapped out. Sometimes function that is a separate chargeable feature later becomes part of the design by moving the function totally into hard- ware code. In essence, it goes from fee to free but it is not truly free since it is now in the base manufacturing cost and contributes to end-user pricing via the hardware pricing methodology. In your example, I dont think of phones as having operating systems per se though I am not educated on this technology so my next assumptions are dangerous. Anyway, I would imbed this function within the hardware like microcode is to a computer as a way to implement the function. One could argue that this is how "phones" do it and we are first into this market so that is the paradigm to deal with here. MSFT was not first and it is software that sits above the EUI and this is a different business with P&L responsibilities and the MSFT browser is sold separately so to strong arm PC manufacturers to take the "bundle" is dangerous ground in my view. Anyway, if the "phone" system has true software above an EUI then it gets more complicated and probably requires a snap-out if Netscape and/or Explorer find a way to make their browser work on the qcom "phone" system. But it would be the competition's responsibility to make it actually work not a qcom responsibility just as Amdahl and Hitachi must make MVS work on their systems and customers using those systems know that IBM's responsibility for fixing MVS errors only apply to best efforts since the PCM hardware is outside of the MVS "specified operating environment" within which MVS was tested. The SOE only includes IBM hardware so there lies the potential end-user concern. So niche opportunities often disappear as technology and architectures evolve. This industry is full of companies made obsolete by technological innovation. EMC survived by moving from OEM memory subsystems to DASD. Cambex didnt move and are in Chapter 11. Word processing was neat in the early 80s but Wang imploded when customers wanted more and other vendors put data and text in one offering. And so on. So Netscape needs to evolve too and find some new ponies or get absorbed by someone larger who can utilize Netscapes intellectual property and people in a more macro environment. This is why this industry is so volatile and exciting.

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