Hi, Dave, John, Caxton and Michael.
Dave, CDMA got contracts in South America, but the continent is still mainly TDMA. Ericy just got another 300 million deal last week. I *am* counting Mot out. They are through. The company is losing 1-2 percentage points of handset marketshare every *quarter*. This makes Apple look like Dell. And this beached whale of a company, a company that can't even build its own digital switches, a company whose CDMA networks' biggest claim to fame is that they shut down over a hundred times a year and get replaced by Lucent is doing the big CDMA launch in Japan. Lots of luck. China is biiig indeed. But market hegemony is market hegemony. GSM has a lead of four years and nothing will turn back the clock.
John, the point about profit margins is taken. But I think the "real" profit margin is what the company gets from the phones it manufactures itself. And Qualcomm is on thin ice here no matter how you dice it.
Caxton, gotta confess I am confused about the IPR issue. According to European press no problems exist. I think Qualcomm is the only entity that thinks it has a shot at 5% licensing fee or it can stop the project. Given this company's known proclivity to making grandiose statements and rosy projections, I doubt their voracity in this matter (yes, I used to be an alt.urban.folklore junkie).
Nokia's main strength is not making phones. It's not making networks, either. Nokia's big strength is creating or co-creating standards and then using its headstart to lock up a substantial portion of the new market. It did it with NMT, which was one of the first analog standards and became a smash success in Northern Europe. It did it with GSM. It did it with TETRA, which is fast becoming world's leading trunked network standard and a huge profit machine for Nokia. It is in the process of doing it with Bluetooth; Nokia designed most of the mobile phone parts of this new standard linking handsets to PC's, printers, etc. And it most likely will be the company that first implements Bluetooth in its handsets and reaps most of the benefits.
The point here is that Nokia's track record in creating new standards and pushing them into commercial success is nonpareil. No other company has this many successes without notable duds. So I really doubt that with this record Nokia would have stumbled too badly with W-CDMA. How on earth could this particular company be so naive that it would have opened the door to Qualcomm to demand an extravagant 5% fees? And in this context, the demand *is* extravagant. Nokia gets very low fees for GSM, for example, so low nobody even considers these fees as a revenue source in analyzing the company.
If Qualcomm really can stop W-CDMA or get 3-5% it should have a stock value well over 100 dollars already. Apparently very few people believe in this. The European articles on W-CDMA don't even mention Qualcomm. None of the two dozen articles I've read on the topic. And these are the reporters that announced Nokia/Ericsson W-CDMA standard getting NTT's backing in last spring, well before any US journalists were even aware of W-CDMA. I have every reason to trust Nokia and European mobile telephone experts in this matter. If it gets to expensive litigation, I know for whom I'm going to bet.
And, BTW, USA is not CDMA. That's one key issue. Europe is GSM, but USA is splintered among competing standards. The new ATT price plan with Nokia's 6100 line of phones and Ericsson's massive 788 ad onslaught in USA will produce some interesting results by year's end. Intel is allied with the Nordics, not any American mobile companies. Microsoft's favorite is Nokia, not some West coast company. Mot got dumped by ATT, Intel and Microsoft. And Qcom wasn't even in the competition.
China is so deep in GSM the only question is what kind of niche CDMA can achieve. If Chinese themeselves project that 34 million GSM phones will be sold in the year 2000, just how much headway can CDMA make against that, considering it is startinf from zero? It took years of work from Ericsson and Nokia to build this success.
Right now, I think Nokia is still good value (didn't see that coming, did you?). The main thing being that it's both safe (increasing share in networks and handsets, betting on all standards to some extent, creating new ones) and far more profitable than the competition. My problem with Lucent is that their handset joint venture with Phillips is a disaster of epic proportions. Big losses, no market share, no future. I'd rather bet on a company that makes both networks and phones.
I have to admit that if Qualcomm can get through its demand of a 3% cut of W-CDMA, if it can make money in manufacturing and if CDMA makes a sizable dent in China and Japan, it could zoom to 200 dollars in two years. But right now, none of these ifs look particularily likely. If I want to gamble my hard-earned money I'll buy Entremed or Onyxx and hope they will cure the cancer in three years.
Michael, Korean companies are for CDMA, because their government has mandated it. They couldn't cut it in GSM competition, so they decided to enter a less competitive race. The Japanese are betting on GSM and W-CDMA much more heavily than on Qualcomm's standard. Check out Sony's hot new GSM product pipe-line and you'll see that is where their heart is. GSM *is* an open standard. Everybody is making GSM phones.
AEG, Alcatel, Audiovox, Bang & Olufsen, Blaupunkt, Bosch,
Ericsson, Falcom, Ferrari, Maxon, Mitsubishi, Motorola, NEC, Nokia,
Panasonic, Philips, Sagem, Samsung, Sharp, Siemens, Sony, Toshiba.
And you said: "...the IPR for GSM is spread all across the
major European companies that produce it. In that atmosphere you CANNOT call GSM an open standard that anyone but a select few have any chance of producing it." Please. There are more GSM manufacturers than soap-makers. That IPR opinion is a total falsehood. Time will tell whether Qualcomm has any real claims to W-CDMA. I would expect that Wall Street would have found out by now, though. Perhaps thye have.
Tero
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