*200/2/2000 and royalties* I suppose a few people are starting to think 200/2/2000 is not that silly after all. The $100 by 31 March came in.
After cogitating for a while and trying to figure out the big announcement, it seems that the main thing is that Q! has upped the royalty to 6% or whatever the cdmaOne rate was. We have a fairly good fix on that thanks to the Koreans breaking their confidentiality agreements when whining like 747s about how the excessive royalties were ruining the prospects of cdmaOne. They were wrong and now everyone knows it.
I'm disappointed we didn't get 15% royalties on WWeb. But considering the original comments from Q! a year or more ago were that royalties would be in the low single figures, meaning to me something like 2,3 or 4% we are doing okay with 6%. Thank goodness the intervening time showed just how impossible it is for anyone else to duplicate Q! achievements and the royalty rate was doubled to 6%. This is very, very important because it means Q! is going to get a LOT of money dropping without touching the sides to the bottom line.
Q! has been very, very good in the negotiation; they have thrown Ericy a bone by agreeing to pay them a dinky royalty which is effectively a discount on the 6%. By Ericy agreeing to this 'high' royalty rate, it sets the benchmark for everyone else. Now EVERYONE will be having to pay 6% [or whatever the exact figure is]. No reduction from cdmaOne contrary to most people's expectations.
W-CDMA will be stillborn. If anyone can figure out a reason for Ericy to go ahead and produce W-CDMA I'd be interested in knowing why. The higher chip rate is alleged by Ericy to give better performance, but Q! disagrees. I believe Q! By the time WWeb equipment is ready, there will be multi-$$billions of cdmaOne installed and backward compatibility will be essential.
While Ericy blunders around trying to make W-CDMA work, Qualcomm, Lucent, Motorola, Nortel and others will be racing ahead with cdma2000 which is fully backward compatible with cdmaOne. Qualcomm knows what is possible with CDMA and things could go very quickly now that everyone is focused on it and the cash flows will become enormous.
Suppose Q! comes up with OFDM systems, there might be a whole new round of licensing while Ericy is still trying to get W-CDMA going. I guess that Ericy figures they will run the two in parallel while they find out what they can achieve and ditch W-CDMA when they see that cdma2000 offers a more fully featured and easier system than W-CDMA. Ericy still has to make the infrastructure business work. Lucent and others will be strong competitors and they have a head start.
Maybe Q! figured that it's better to really get things happening now and continue to develop their technology portfolio than mess around now trying to get a bit more. $1bn for the infrastructure assets and staff seems a reasonable price for Q! and a bargain for Ericy. They know that they'll be able to move the goal posts so fast that others won't keep up. George Gilder's 'dumb networks with intelligence at the edge' means Q! has kept the part which matters. The ASICS in the handsets and the infrastructure. Peripheral Processing [TM] is where it's at. Q! is sitting right there at the centre of the periphery [if that doesn't sound upside down or inside out].
Mqurice
Dow 16,000 Feb 2002
200/2/2000
Q! is the centre of The New Paradigm |
