Chaz:
To be honest with you, I have really stopped worrying about nomenclature. I think QC's cdma2000 variant of 3G has some important technical advantages over WCDMA, but I fully expect the latter will get deployed is various forms and fashions. As I noted before, complexity is the mother of greater royalties and a more persistent technology franchise so viva la complexity. The debate between cdma2000 and WCDMA, to my mind, is really not germane to QC value creation (and debating between the two is fighting yesterday's war).
To my mind, the deployment rate of 3G--in any CDMA mode--is a far more interesting and actionable question. Understand that in some instances, 3G networks will be deployed in conjunction with 2G, i.e. the latter remaining a voice-oriented architecture. Therefore 3G represents an overbuilding effort that could expand investment in infrastructure (read this as +++royalty $$$) coupled with a new product cycle of 3G related wireless appliances. The last point is subtle and important. There are still a number of, in my opinion, clueless analysts that want QC to sell its handset business. I think these boys (and girls) are missing the big picture. 3G devices will have far greater functionality and complexity then the cellphone. Average selling prices (ASP) will be far higher, and should prove more sustainable due to product differentiation. Consider the Palm Pilot. The first Pilot's sold for $299; newer models, with more features, bells and whistles, command a substantial premium to this introduction price years after the initial product has become obsolete. Qualcomm's QPE division has a decent chance at a similar outcome for its next generation devices. Imagine...rising ASPs for QPE rather than declining ASPs...the thought of it makes me all warm and tingly :-)
Beyond the implications for QPE, rapid 3G deployment will drive a tremendous acceleration of royalty and ASIC revenue on top of an already accelerating 2G curve. Think about it. New markets (read ASIA and EUROPE) coupled with new networks in existing markets coupled with new wireless devices in conjunction with traditional cellphones. Again, the thought of it makes me all warm and tingly.
Here's the kicker. Widespread adoption of analog cellphones took many many years; the move to digital has happened surprisingly quickly; the move to 3G may happen even faster since Internet access and wireless data is on the forebrain of every telecommunication provider in the world. If widespread 3G becomes an economic reality in 2002 rather than 2005, then Qualcomm's royalties are likely to move up asymtotically from current levels and I have produced earnings models that are almost hard to believe. That is what is so amusingly stupid about the current 'short' arguments which are entirely (and inaccurately I might add) predicated on short-term challenges like Korea. We aren't 'there' yet, but I am beginning to see over the horizon. Nokia's announcement today appears to be extremely positive in that the 'horizon' just moved a lot closer.
Best regards,
Gregg
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