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

To: Bux who wrote (2511)	10/19/1999 12:59:00 PM
From: slacker711	Respond to of 13582

The Q is still working hard....excerpt on FCC and GPS. The FCC said GPS-based wireless handset technology has progressed far more rapidly than expected, and cited Qualcomm Inc.'s intention to develop a GPS location system for next year's market. Indeed, San Diego-based Qualcomm wasted no time in taking advantage of the ruling, disclosing last week at the Telecom 99 show in Geneva that it is offering GPS technology in its handset and chipset lines. Called gpsOne, Qualcomm's GPS-based software capabilities will be added to its Mobile Station Modem (MSM) family of CDMA-based chipsets by year's end, said Johan Lodenius, vice president of marketing and product management for Qualcomm CDMA Technologies. edtn.com

To: Bux who wrote (2511)	10/19/1999 5:51:00 PM
From: quidditch	Read Replies (1) \| Respond to of 13582

With regard to the royalty on the subscriber device, or computer for example, it makes sense that the royalty be less as a percentage of the price of the device since a computor sells for much more than a phone and the functionality of the device extends beyond a wireless connection. But the overall royalty per device is likely to be much higher than for a phone because of the higher price of the computer. Hey Bux, Slacker, how are you guys doing? Two thoughts: Being conservative re. Q's bargaining power in asserting that it is due a royalty on the laptop (the "subscriber device" analogous to the handset), I would not go as far as you do in asserting that Q can command a royalty based on part or all of the ASP of the laptop in addition to ASIC sales revenues. I think Bux has the idea right when you point to the multi-function of the laptop. This is distinguishable from the CDMA handset's functionality (i.e., its value as a communications device), which is based squarely and primarily on Q's IPR and the CDMA radio interface. The laptop is a multi-functional appliance, one of whose apps (we hope) will be wireless connectivity, just as a CDRom or DVD drive is. While wireless connectivity should spur what will be lagging PC and laptop sales, I don't think that the economics and practice in the PC industry admits of royalties to a supplier of peripherals, RAM or apps based on ASP prices of the box in which they are installed, whether as OEM or add-ons. As wireless handsets become more multi-functional (and thus more like a multi-functional computer), for Q to assert such a position would invite manufacturers of browsers, smart memory cards, and other apps to negotiate a royalty based on ASP of the handset. Of course, we'll be out of the handset businss by that time, so we don't care. In any event, Q should do fine just selling ASICs to the box makers. As far as "a really bad situation" posited by a poster, the Q license language subjecting the license to termination in the event of a licensee's change of control (as with DSP and VLSI), is good and standard language. Before we assume that Q will drive a "hard" bargain with INTC, management will weigh the benefits of (i) refusing INTC a license (almost inconceivable), (ii) deriving high royalty rates (and implications for competitive prices and a solid relationship with INTC) versus (iii) enhancing the "CDMA adoption thesis" with a powerful partner like INTC (vs. trying to preserve as much ASIC share for itself as long as possible). I agree with Bux's statement [s]o far, Qualcomm management has shown excellent judgement when setting royalty rates....I have no reason to believe they will not show the same amount of acumen when negotiating royalties for other devices...., except that I think ASICs is the operative word in the PC space. JMO Steve PS I was in Mexico last week; apologies if the above thoughts were expressed earlier. No chance to read the 1000 or so posts.