Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: DOUG H who wrote (59229)	1/4/2000 2:28:00 AM
From: djia101362	Respond to of 152472

QUALCOMM Wireless Winner By Scott Woolley IT IS OFTEN SAID THAT THE BEST STANDARDS FLOP while lesser technology gets locked in. It happened, the story goes, when Microsoft Windows crushed Apple's Macintosh and when VHS beat Betamax. That was the sorry fate predicted for Qualcomm. Its elegant code division multiple access (CDMA) cell-phone standard was long praised for its technical strength, but fewer people were choosing it over competing standards, such as time division multiple access (TDMA) and Global System for Mobile Communication (GSM). Three years ago the wireless industry was in a mad rush to establish a single digital standard. European bureaucrats dictated that the rival GSM design would be the standard for Europe. Japan endorsed GSM, too. The U.S. market fractured, with AT&T and other big players rejecting Qualcomm's CDMA for an incompatible approach known as TDMA. But here's one case where technology ultimately triumphed over tactical advantages. Qualcomm founder Irwin Jacobs stuck to his guns, refusing to dilute or relinquish his patented CDMA technology. Industry insiders blamed his stubbornness for causing billions to be spent on incompatible networks. But CDMA is gaining sway as its advantages become clear, namely its superior capacity, lower costs and data-friendliness. GSM backer Ericsson at first balked at licensing CDMA patents, but now it has caved. Two years ago "we got a lot of grief for not being more like the Europeans; everyone said it put the U.S. [cell-phone market] way behind," says Jacobs. "But as usual the free market proved the best way to sort out the superior technology." In 1999, with acceptance of Qualcomm's format taking off, license fees poured in and the company's stock price zoomed fourteenfold. It was the hottest stock in the S&P 500. Jacobs professes to be completely unsurprised by the sudden turn of events. A 66-year-old former engineering professor who founded the company in 1985, Jacobs was always more captivated by the technology than the marketing. When he founded the firm he had no specific product in mind, but named it Qualcomm for Quality Communications. The former professor has now turned Qualcomm into his own giant research lab. He shed capital-sapping manufacturing businesses to focus on developing new wireless technology. The company's tower-equipment business went to Ericsson in March. A deal to sell the handset-making business was set to be announced this month. When that selloff is completed it will leave Jacobs, now a billionaire, overseeing a group of 9,500 employees with some of the strongest wireless brainpower around. There's lots to keep those brains busy. The next generation of wireless networks will fling Web pages and video through the air at blinding speeds. How that will work is a matter of debate, but next-generation phones will rely heavily on Qualcomm. The question is, how heavily? At issue is an emerging standard called high data rate (or HDR) transmission. With rivals like Motorola equally focused on developing the new data standard, it won't be easy for Qualcomm to duplicate its CDMA success in HDR. Just watch us, says Jacobs, who points to the gusher of royalties from today's CDMA networks now funding his R&D. He believes that if Qualcomm can get HDR--which is technologically similar to CDMA--accepted quickly, it will help him stay one step ahead of rivals. The emerging mobile data market will be huge, Jacobs predicts. "So our main thrust will be convincing the industry that there's a great economic benefit in getting this technology out there early."