Qualcomm Incorporated (QCOM) Message Board

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Technology Stocks : Qualcomm Incorporated (QCOM)

QCOM 175.25

+0.6%

Dec 19 9:30 AM EST

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To: straight life who wrote (23982)	3/10/1999 9:45:00 PM
From: Clarksterh	Read Replies (2) of 152472

If there's a comprehensive agreement with ericy that engages both parties in a Q/NT-like relationship that would be the best of all possible worlds Everyone seems to think that any deal where Qualcomm gets an agreement like they have with Nortel is a good one. Not so (IMO). Imagine that Qualcomm 'settles' for having a type of wideband CDMA standard which is not backward compatible with CDMAOne (e.g. one of the three pieces of the new standard uses 4.096 Mbps chip), but that they also sign a deal with Ericsson that they get 25% of all of Ericsson's CDMAOne/CDMA-2000 business. Is this a good thing for Qualcomm? I think not. I'd think Qualcomm would be better served by letting Ericsson twist in the wind. With a deal like this and with Europe's propensity for setting standards I think it likely that Europe (with all of their 'trials' already running) would force the incompatible version of W-CDMA and other countries like China seem to be waiting to see what Europe does. So what if Ericsson gives 25% of its IS-95 contracts to Qualcomm. 25% of $0 is $0. The only benefit from this would be increased royalties, but at the expense of eventually selling a niche product. Or alternatively, imagine a somewhat better deal with Qualcomm. Ericsson agrees to give 25% of all its CDMA (W-CDMA or CDMAOne or ... ) to Qualcomm, but CDMAOne is not upgradeable to the version of CDMA that Europe forces. Then Qualcomm and other CDMAOne vendors (including now Ericsson) lose a huge opportunity to sell equipment into Europe with the promise to upgrade it to the standard when it is ironed out. At least Qualcomm doesn't 'lose' anything except opportunity in this solution, but neither is it particularly rewarding for the innovator. They become just another CDMA provider, since by the time W-CDMA comes out I suspect Ericsson, Nokia et all will have largely caught up with Qualcomm. The point here isn't to preach doom and gloom, but to make it clear that the devil is in the details. Not all deals with Ericsson are good ones just because Ericsson agrees to help Qualcomm's infrastructure business. Qualcomm's primary aim should be to use their IPR to open new markets, not become Ericsson's lackey. Do not allow everyone else to catch up by an arbitrary (i.e. not performance driven) change of standards. All JMO Clark

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