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Technology Stocks : Nokia (NOK)

NOK 6.835

-1.1%

Nov 7 9:30 AM EST

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To: Quincy who wrote (1471)	2/5/1999 9:06:00 AM
From: tero kuittinen	Read Replies (1) of 34857

Let's do a thought experiment. Imagine a genuinely objective observer from Trinidad and Tobago scanning over the developments of the last two months and evaluating the chances W-CDMA has to succeed. What he sees is the ongoing, acrimonious debate over the IPR rights that does not seem any closer to being resolved. But he also sees Koreans expressing the most explicit interest in W-CDMA yet seen. He sees NTT-Docomo steaming ahead with their W-CDMA investing and development projects. He sees 14 operators applying for a UMTS license in Finland, despite the insignificant size of the market. He sees China steadily ramping up the GSM expansion and expanding its W-CDMA trials. So while we still have no idea which way the patent dispute is going and no clear indication whether consumers actually want phones with live video, W-CDMA has not lost any momentum despite of these question marks. You would think that the observer would conclude that while the entire project is still risky, it must be viewed worth the risk by a lot of companies determined to spend billions of dollars in the concept. No way are W-CDMA phones going to cost as little as current handsets. That's the point - margins will be higher for both manufacturers and operators. But these handsets are not competing with traditional phones - they are competing with laptops and PDA's to become the wireless internet access device of the future. If Qualcomm really gets 5% licensing fees from W-CDMA equipment, then I have been wrong and Qualcomm enthusiasts have been right. They will be rewarded by enormous stock price gains. That's the way it goes. Almost as good for Qualcomm would be the scenario where W-CDMA would be forced to be compatible with current IS-95 networks: another huge win for the company. I have never disputed that the possibility for these scenarios exists. Is the possibility so high that it makes sense to invest in Qualcomm? This is not an obvious dilemma. Korean companies bluntly observing that they may support W-CDMA, even if it is not compatible with the IS-95 network currently operating in Korea is significant. So is the fact that the Koreans and Qualcomm apparently were unable to solve their dispute before the case reaches litigation. Can any reasonable observer dispute that Koreans are very important to the 3G dispute and their support for W-CDMA would be hugely influential, considering that Japan and China are already in the W-CDMA camp? I'm not sure why it is so hard to believe that I don't wish ill for Qualcomm - I'm just trying to interpret the current developments in the field and identify the biggest winners. Would it be easier to trust that I'm striving for impartiality if I were an American? I'd say yes. That's the way it goes. I can only say that looking at the last two months W-CDMA as a concept is now stronger than it was before Christmas. The surprising willingness of international operators to invest hundreds of millions of dollars in building a W-CDMA network in Finland seems like a sign that the operators are willing to pay up - I don't see the analogy to high definition TV, since broadcasters never showed willingness to make truly substantial investments to make it fly. Next test comes with the English bidding competition for 3G licenses. And it looks like a stampede is going to be bigger than in Finland. British Telecom, Vodaphone and other major operators seem determined to win a license. The recent big TDMA network deal in USA and GSM network deal in Turkey underline the fact that these standards are expanding robustly. The notion that they are being made obsolete by CDMA simply does not mesh with reality. We should first look at what is happening in the real world - what people and operators are buying and investing in - and only then start drawing conclusions. Not attempt to make facts fit with preconceptions. All this talk about CDMA in China... where's the beef? I can point to several big GSM deals in the last couple of weeks. I can point to the big investment China is making in launching domestic GSM equipment manufacturers. This is long term commitment. Where are the CDMA network deals? Where is Chinese investment in CDMA manufacturing? I like arguing about what the real world developments are about and what their significance is. But I can't argue with blind faith. Tero

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