Tero, there sure is a big story. The avalanche away from analogue is on! Q! has made a mistake with quality problems and lack of production capability despite analogue obviously going to hit the wall this year. It has now hit the wall. TDMA with excellent Nokia handsets is doing well. Price per minute is vital. Some, maybe even including subscribers, claim that handsets are unimportant. What people do is more important than why they claim to do it, even if they believe what they say. The fact is they are choosing Nokia handsets by the million.
Even if they do choose Q! handsets, they can't get them all too often. Or they are being recalled. Or the plastic cracked and warranty replacements are still being made taking up production line space. Or the connector failures are still coming in and needing replacement.
The other point which has been mentioned but you haven't commented on, is that there are some 26 handset cdmaOne licensees. They all paid money upfront and it's fair to assume they planned on producing cdmaOne handsets. There are many of them now on the market. So of course QUALCOMM's market share in cdmaOne will drop heavily and in digital overall due to the rapid ascendance of Nokia and the surprising strength of TDMA which relates to effective price per minute competition combined with coverage and handset factors. QUALCOMM's market share in cdmaOne will drop rapidly from 100% in late 1995, down to 50% a while ago down to something like 10% in a couple of years, or 20% if they are really, really good.
As you say, handsets are not just for geeks or business people. There is a vast range of handsets needed in many languages. That means huge design and development costs which even Nokia with their huge income stream will not be able to cover. Q! certainly can't fund the massive development budgets needed, so all the licensees will be thrashing around, creating market niches where they can be successful. That's why Q!'s market share will drop.
While I'm disappointed that Q! did not produce the amazing development which Nokia has succeeded in doing, they are still very, very, well positioned for developments.
As the analogue base stations are replaced with cdmaOne, Q! will make a lot of money from infrastructure sales and royalties from other infrastructure suppliers. Then from ASICs and royalties on the swarms of cdmaOne handsets which the multitude of cdmaOne licensees will produce. Nokia will be one of those. They will have to go like mad to get a 10% market share in cdmaOne.
TDMA won't succeed like cdmaOne when the price per minute competition gets ugly. They are having a spot of fun before the all-in, anything-goes, free-market mayhem hits the streets.
Maurice |
