All:
The fabuluous market babe has got something to say about CDMA...
fabmktbabe.com
Stock of the Day
2/16/99
Wireless, Wireless, Wireless ! - Part I
Given all of the commotion as of late, I thought it would be helpful to review just exactly
what is happening in the wireless arena these days, as well as what is to come.
As always, let's start out first with a bit of history.
Wireless as a whole has been success because of the explosion overseas. That is, even
though cellular phones were invented by the American company Motorola, the use of
wireless outside of the U.S. has been much greater than across the U.S., and will,
correspondingly, continue even in light of Asia sucking wind for as long as we dare to
remember.
Here's why.
It is important to note that economies are not the only unstable factor in the above
mentioned region.
Consider, for example, the the bulk of Asia's telephone networks.
When you have a Typhoon Harry every year popping up and destroying half of a country's
infrastructure at a moments notice, it is much easier (and more reliable) to forgo
investment in repairing old French, Dutch or American colonial era copper telephone
networks and instead just build transmitters which do not fail.
Of course, there are other benefits to wireless such as rights of way issues, less
government control, etc. However, just knowing that wireless is the only way for most third
world countries to possess effective communications will make you a star if anyone
dares to ever ask you.
Secondly, in Europe, even with its established networks, wireless has exploded due to
an amazing lack of fixed and gimmicky calling plans. That is, unlike in the U.S. where
there is everything 5 cent Sundays to 10 cent fixed standard calls, there is a definite lack
of these type of rates in Europe. Thus the difference in cost between a toll call and a cell
call in Europe is not all that much, and, given the convenience of cellular, this should
explain why the NOKA's ERICY's etc., have been off to the races.
But enough with the past -- let's look to the future.
In terms of what's ahead, the push towards wireless networks will be tough for almost
anyone to escape.
And this would be because...
The switch to digital is well underway.
In other words, in five years analog cellular networks will go the way of the cassette
recorder.
And with the digital push not about to slow down for a second, the next question
becomes which standard will succeed -- TDMA or CDMA?
As a quick note, and linking all of this back to the previously mentioned information, the
former is mainly in Europe, while the latter is present in the U.S. as well as lightly
sprinkled across Asia.
So here's the scoop.
While the names are not important, what is important is that TDMA will fail, given the
power required to transmit its signal is much greater than CDMA. As such and as a
result, TDMA puts a minimum size requirement on how big the corresponding phone will
be.
And, just to point out, more power equals a greater amount of radiation being aimed
directly at your brain.
Something that, just to state the obvious, tends not to translate very well into strong sales.
As such, the radiation must be shielded, hence the requirement of a big and bulky
phone.
In addition, it should be noted that with TDMA, more power also translates into higher
maintenance costs. As such, even though initially the costs to set up a TDMA network
are cheaper than a CDMA network, the cost to maintain the former is greater than that of
CDMA. An easily understood demonstration of this is akin to adding low-energy light
bulbs in your house, whereby, given enough time, you will see the difference in your
electric bill.
As to who will benefit as to when the Street wakes up to the fact that CDMA is the clear
winner, this is what QCOM's entire business is centered on.
So, in wrapping all of this up, by all means stay tuned, as there is a lot more to say on this
topic. As a preview, Part II will be examining the applications of all of this great
technology in terms of what you can expect from new products, as well as which of the
players involved have not only an ace up their sleeve, but a royal flush as well. |
