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To: Terrapin who wrote (2325)	9/25/1999 4:34:00 PM
From: Bux	Read Replies (1) \| Respond to of 34857

3) What makes people think that the very best technology always wins out? (Was VHS better than Betamax? Were PCs better than Macs?) A corollary to this is that management makes a big difference. Terrapin, nice alias, I like it (and you ask some good questions). I'll tackle number three since starting about two or three years ago I have bet increasingly larger amounts on my belief that CDMA would win out over TDMA based technologies (GSM, iDEN, etc). The history of these discussions are archived on the "Qualcomm, Coming into buy range" thread. I will try to provide a summation of some of those discussions. You are right, the best technology doesn't always win. I think the wireless operators have concluded that CDMA is a superior technology for numerous technical reasons, many of which are not visible to the subscribers. Only someone with a hidden agenda would argue that point. Many of these advantages provide an economic advantage to operators who deploy CDMA over those who deploy TDMA technologies. Looking forward to data, this competitive gap widens further. Since the network operators decide (in a free market) which technology will be deployed, the consumers don't really care. As long as the service offers them what they want, at the price they want, they will buy it. Wireless is growing rapidly and network investments are large. Those operators who can spread these costs over the maximum number of subscribers, or more accurately, the maximum number of minutes of airtime, will be able to offer the service for less, to more users, and still maintain superior profits. It's really very compelling and simple. Since the technology is basically invisible to the consumer, the most efficient technology will win. Add to this that CDMA has advantages when it is time to add capacity and advantages when it is time to add data service and it is even more compelling. Beta may have offered superior quality over VHS, but that superior technology did not have a cost advantage, it actually cost more. In contrast, CDMA offers long-term cost savings for network operators AND a quality advantage with the reliability and transparency of soft-handoff, among other things. In contrast, Tero has been arguing for years that since TDMA based handsets have a technological lead, they are smaller, cost less and offer more features than CDMA handsets that CDMA was doomed to be a niche market. He has failed to consider that CDMA handsets are subsidized by carriers so it is not the cost of the handset itself but the overall network cost/subscriber that determines the true cost. Also, CDMA handsets are rapidly improving, costs are plummeting and capabilities will soon surpass those of TDMA based handsets. Those who fail to recognize this must have some other agenda. In deciding which communications companies to invest in, an investor must not look only at the technologies involved but where the revenue comes from. In the case of Qualcomm, analysts are projecting future revenue streams will be derived primarily from ASIC'S and royalties. These are both high margin businesses and that bodes well for Qualcomm's future. I believe that over-diversification is the single most common reason for poor portfolio performance and therefore I have chosen to invest in only one wireless company. I do think Nokia and Ericsson are also good investments although margin pressure going forward could affect performance. Your comment about management is also important. I think both Ericy and Nok management really blew it by not ramping up CDMA sooner and trying to go it alone for so long (supposedly in the name of protecting their existing GSM royalty streams. Q's management has demonstrated an excellent forward thinking strategy that has landed them in the enviable position they currently hold. Bux