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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 159.42

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To: Mika Kukkanen who wrote (21777)	1/21/1999 2:15:00 PM
From: Clarksterh	Read Replies (1) of 152472

Mika - You make a massive assumption when deducing that a GSM operator would want to go to a cdmaOne overlay. Read my post again. I'll admit I am not entirely clear, but I never talk about existing GSM customers in that post - only technology neutral operators (e.g. those without an installed base). But since you asked - here is the probable scenario for existing GSM operators and Ericsson's thought process: 1) There is W-CDMA which is 'the CDMA standard' but is not backwards compatible with CDMAOne, however it isn't ready for 2 years. The existing GSM customers will put off any capacity expansion which they do not absolutely need, but for capacity which they have to have now, they install GSM in the existing frequency bands. This is not great for Ericsson (there will be no strategic purchases for 2 years), but neither is it a catastrophe. 2) There is a W-CDMA which is 'the CDMA standard' and it is backwards compatible with CDMAOne. A current GSM operator who does not need immediate extra capacity may put off the order until the final 3g system comes out, but then again they may get a CDMAOne system now with the assurances that it will be upgraded to 3g for minimal cost when 3g becomes available. For the GSM operators that absolutely must have extra capacity, they will almost certainly go with CDMAOne knowing that the equipment will have a longer useful life. This is not to say that they will abandon their current customers, but that they will start migrating them to 3g via CDMAOne (same as did some of the US cellular companies when moving to digital.) Thus, in this scenario, much of the Ericsson business dries up since they do not have a CDMAOne solution. And not only that they lose much of their customer base. Clark

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