To All:
As Philips and Motorola (finally) begin to ship CDMA handsets, ask yourself "why did Qualcomm sign up an ASIC agreement with PraireCom?"
Remember, when the bears cry and moan about "new competition", that QC has actively solicited new licensees to expand the investment in CDMA equipment (and, therefore, the marketing effort behind IS-95 and its derivatives). Licensee diversity equates to royalty stream diversity.
A little perspective on Korea. Churn (i.e. subscribers canceling their service) is NOT, in and of itself, bad for Qualcomm. Remember, these people have already purchased handsets and therefore represent a revenue source for the service provider (SK Telecom etc.) NOT Qualcomm. As churn increases, most service providers will work harder to sign up new customers in order to maintain revenues--remember there are huge fixed costs underlying the cellular network and operators need to load the network. So an INCREASE in churn (i.e. subscriber cancelations) will likely prompt providers to offer discounted rate plans and additional handset subsidization to attract new subscribers. I am not suggesting that this will make life easy for the Korean service providers, but it hardly corresponds to incremental bad news for QC. Think about it this way. If SK Telecom reports 100,000 net subscriber additions in February, and 30,000 subscribers canceled during the period, then the company would have had 130,000 gross additions (i.e. sold 130,000 phones). Therefore, to the extent that people want to focus solely on Korea, and ignore developments in North American, Japan and elsewhere, I suggest that you look at GROSS SUBSCRIBER ADDITIONS (which reflect underlying equipment sales) rather than net-adds or cancelations.
BTW, the same applies to Sprint in the U.S. People have looked at the raw subscriber numbers (over 1mm) and assumed that this metric equals the number of phones sold. Incorrect. Sprint has been suffering from rather high churn, due to poor coverage in some markets. Assuming a 5% annualized churn rate (which is high, but probably in the ball park), Sprint would consume another 50,000 phones above and beyond its net subscriber number.
Sadly, the rumor mill continues to spew B.S.
Best Regards,
Gregg |
