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Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: DaveMG who wrote (1278)	9/4/1999 12:24:00 AM
From: FedWatcher	Respond to of 13582

Dave, Gregg made me think and I somewhat agree with you. I also think that the price erosion should have an impact not only on CDMA phones. Consider an average cell phone buyer. He does not give you know what if it is CDMA or GSM or another goddamn acronym. He just does not care. What he cares about is coverage, service plan, how the phone looks and functions, voice quality and things like that. He also cares about prices. So he goes to different stores and compares. If he finds two phones that are relatively similar in their functionality and appearance, service plans and so on, then he looks at the price. In other words you can not just drop CDMA handset prices without affecting GSM and TDMA handset prices. I do not think it is possible. So if Nokia wants to start a price war in CDMA phone prices they better get ready to get hit in GSM segment as well. That will hurt them. And I know how much falling GSM handset prices will hurt QCOM. No more than falling exchange rate of the Mongolian tugrik. One year ago one could argue that CDMA handsets were way more expensive than GSM or TDMA handsets. Well, not anymore. So the price war will not be limited to one particular technology, IMHO. You are saying <Additionally the price that it pays for many standard components are likely to be lower than Q's so the playing field is not exactly even before Q's royalty and ASIC advantages kick in.> I do not know what percentage of components can be reused between GSM, TDMA and CDMA phones. Plastic parts, may be. But internal guts, I doubt it. Filters, amplifiers and so on are different. So if Nok/MOT and others have any advantage of economy of scale in this area, it is just a portion of the cost of the phone. In other words, the truth is always somewhere in the middle. Tero's beloved Nokia does have some advantage but not as much as he would want us to believe. For these reasons it appears to me that Gregg's point is very valid. Best of luck, FedWatcher