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Technology Stocks : Ericsson overlook?

ERIC 9.365

+0.8%

11:40 AM EST

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To: slacker711 who wrote (3294)	6/2/1999 11:27:00 AM
From: tero kuittinen	Read Replies (2) of 5390

I'd like to point out that many GSM operators had sequential growth from 4Q to 1Q as well - even though this is unusual. If we assume that outperforming expectations is the key to superior performance of any company, this feat looks much easier for GSM to achieve than for CDMA, thanks to the PR blizzard of the latter. Sticking to time schedules is the problem of every CDMA manufacturer I'm aware of. CDMA Startac delivery was at least a year behind early forecasts. Qualcomm's Q-phone slipped from late summer to Xmas season last year. pdQ has now been three and a half years in development... this is a Rx for rapid obsolescence. Q-phone was sunk mainly by the 40 hour stand-by time, which wasn't acceptable in 1999 anymore. pdQ will have the same 1997 stand-by time standard when it finally comes out this summer. This is the profit problem for CDMA handsets: Nokia's 6100 series debuted in February 1998 - it is still the bestselling handset in the world and apparently will have legs to maintain some momentum through next winter. The GSM version will have an effective lifespan of at least two years. But the CDMA versions of both Startac and Nokia's 6100 series will start selling 1-2 years after these platforms debuted in GSM - they are starting to look a little faded as soon as Motorola's V-series and Nokia's 7110 are out in GSM. The pricing power belongs to most advanced models. It's possible for Nokia and Motorola to make the CDMA versions of aging models profitable, since they already have a built-in demand from GSM and TDMA advertising blitzes and multi-million unit production volumes. But any company specializing in CDMA does not have the heavy advance brand recognition or big component volume in place for models that have not built up steam in other standards. What a specialized CDMA manufacturer would need to succeed is to match the specs of leading GSM models at the same time they debut. This would mean a three-ounce CDMA model being out right now in USA (as V3688 is in GSM markets). Or a five-ounce WAP internet phone with two-band digital technology with a ten day stand-by time and a display the size of 180% of 6100 series (7110 this summer). This is obviously not happening. The flopping of Q-phone left a gaping hole in Qualcomm's high-end strategy - they can't possibly compete with the Thin Phone alone as a new handset platform. That's reflected in the big CDMA handset orders landed by Motorola and Nokia. They can offer a combo of high-end/low-end CDMA model platforms already coveted by consumers. Trying to run Thin Phone against this would demand either superior design or a lot more muscle than 80 hours of stand-by time without battery-swapping. Probably both. Tero

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