Taking a look at the "big picture", how about some discussion about worst case, better case, best case.
Worst--Three standards are approved for 3G. To go ahead with W-CDMA, Ericsson sues QCOM or vice versa and QCOM loses. The courts see Ericsson's IPR as essential to IS-95 and cdma2000. QCOM owes damages to Ericsson. QCOM no longer collects royalties. Gregg must eat his monitor, and his dirty boots during a live webcast from Naples. Marc Cabi supplies his own shoe as well for Gregg to consume. I see this as the absolute least likely scenario. There are 60 licensees that back up QCOM's claims about IPR, and Ericsson itself is beginning the slow process of admission. Furthermore, although I am not familiar with Gregg's girth, it is unlikely that his gastronomic talents would allow the consumption of both footwear and computer hardware simultaneously.
Better--Three standards approved. Ericsson negotiates a lower royalty rate for it's W-CDMA to Qualcomm. Some litigation is possible, shareholders sweat a bit, QCOM prevails. Present day cdmaONE customers flow seamlessly into the next generations of CDMA, with B's, C's, HDR's, XRTT's etc. filling QCOM's coffers with royalties and sales of ASICs, infrastructure, and handsets. W-CDMA offers Ericsson's GSM camp a route to be the same but just different enough from QCOM's version that they are happy. The TDMA crowd implements their version sparingly, and it is no more than a niche product. QCOM prospers from the W-CDMA royalties.
Best--One standard is harmonized, converged, grafted, epoxied, and sewn up. It is essentially cdma2000. The chip rate drops to the 3.6xxx that allows present day IS-95ers to upgrade easily. Seeing this smooth transition in their future, service providers worldwide lean to IS-95 for all new implementations, and for expansion of their GSM systems as well. "Why bother with GSM anymore?" they say. QCOM agrees. Ericsson is left holding squat. Without any IS-95 offering, they panic. "Lucent can you spare a base station?" they plea. "NorTel, I'll trade you a neato GSM antique for some of that advanced CDMA equuipment. Hey Motorola, fresh fish for dual mode StarTacs." To no avail. "Ok, QCOM, you win," they say, "how's about a joint venture to produce handsets and sell infrastructure equipment?" All the world's cell phone users contribute to QCOM's bulging bank account with equipment sales and royalties. Life is good. I don't mind plunking down the air fare to see what Maurice's Etutankamen is really like. It is peanuts.
The Horror--Ericsson is left with no alternative but to consume QCOM and end their pain. I get my $100 per share, and I can still go down under, but I am left with nothing. We hear a huge sucking sound as a void replaces the QCOM thread.
What else could happen folks? Chime in! |
