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Technology Stocks : Nokia (NOK) -- Ignore unavailable to you. Want to Upgrade?

To: q_long who wrote (5851)	6/27/2000 4:24:00 PM
From: Gus	Read Replies (1) \| Respond to of 34857

That post is riddled with so many persistent errors and half-truths that perhaps explain why, despite the brave public front, many QCOM retail investors are genuinely dumbfounded by the withering decline of a 'sure thing.' It is the area where Maggie, relying on Chase H&Q states that "Qualcomm ... sees its (CDMA CHIP) market share dropping from 77% to 43%, while Nokia's will rise from 9% to 25%." The analyst at H&Q who handles Qualcomm is a Mr. Ed Snyder. The information on market share was given to Maggie by Mr. Snyder. It appears to me to be very inaccurate. How can a projection be inaccurate beforehand? One can disagree with the assumptions, but the assumptions are fairly obvious. These are: 1) Nokia, as the world's 11th most valuable brand, will eventually get a CDMAOne market share (25%) that will approximate its 1999 overall market share (28%). 2) More competition will reduce QCOM's share of the CDMAOne chip market, only partly due to Nokia's continued to its own CDMA chip program. Since according to Nokia the Telson deal is targeted exclusively at the South Korean market in 2001, that doesn't change the material fact that QCOM's CDMAOne chip market share is expected to go down as a result of more competition. Agree or disagree, but those are plausible and rational assumptions. Only time will tell if those are prescient. most existing CDMA operators are extremely eager to begin shipping new phones that handle the 1X MC standard. In fact operators in US, Korea, and Japan will have 1X MC operating by 4th quarter 2000 or 1st quarter 2001 Not so fast. Those timelines are too optimistic. Lucent Technologies reported to the Yankee Group that the contract - worth up to $1.5 billion over an estimated two year period - shows that Verizon is serious about this initiative. The partnership has great future promise and will go live in the next week, but it will not be offered to customers immediately. Though beta testing has been conducted and peak rates are at 153 Kbps, this is in a test setting. Rolling out the technology to the end user is not yet on the horizon for Verizon, and profits based on the new technology are not likely to be generated for the next two years. Message 13944701 If a deep-pocketed American wireless supercarrier like Verizon can not make money off a 2.5G technology like 1XRTT in less than two years, what makes anyone think that any other carrier can do so? The Koreans may be angling for first-mover advantage with their October 2000 rollout, but like the Docomo WCDMA rollout next year, that rollout will clearly be done slowly, city by city. If the Yankee Group report about Verizon's 2+year timetable for the rollout of 1XRTT is correct then where is the export market that the heavily indebted Koreans will be expecting? To date, specifications for this technology have not been finalized and it is in testing phase at various sites. Release 99 from the 3GPP contains about 75% to 80% of the finalized specs for a pre-release WCDMA (TDD and FDD). Release 2000 from the 3GPP expected later this year will contain close to 100% of the finalized specs for first-generation WCDMA (TDD and FDD). Nokia admits that they are 18 months behind Qualcomm in developing 3rd generation CDMA chipsets. They chose to develop an alternate CDMA technology primarily to attempt to skirt some of Qualcomm's patents on 3rd generation CDMA technology. This is a deliberate distortion of the vague Nokia acknowledgement on CNBC that "they got on the CDMA (read: CDMAOne) learning curve late" AND "they expect their CDMA (read: WCDMA) products to start shipping in 18 months." Nokia has only 1% share in Japan where the first WCDMA network will be phased in starting next year. How that got twisted into a wishful "Nokia admits that they are 18 months behind Qualcomm in developing 3rd generation CDMA chipsets," I do not know. It also ignores the fact that: a) Nokia does not yet have a CDMA2000 license and because the mainstream adoption of this upgrade platform is questionable, it may be smarter for Nokia to buy its CDMA2000 chips from the likes of Intel or LSI. b) Nokia continues to intensify the pace of its WCDMA field trials which include cutting edge EDA tools and processes (CoWare). The MI WCDMA trial should be starting any day soon this month. They chose to develop an alternate CDMA technology primarily to attempt to skirt some of Qualcomm's patents on 3rd generation CDMA technology. One only believes something like that at his or her own risk. The concept of broadband CDMA was already being tossed around in many engineering peer groups BEFORE QCOM's first narrowband CDMA patent in 1989. It seems to me that QCOM is trying to have it both ways. On one hand, they maintain that all their patents are bandwidth-independent contradicting the bandwidth limitations they set in some of their own patents. But on the other hand, they issue bold statements like these: "The most valuable reality associated with cdma2000 for operators is the fact that all 3G functions can be done in the 1.25 MHz channel, allowing for CDMA operators to take advantage of time to market while enjoying economies of scale." siliconinvestor.com What continues to be underappreciated here in the USA is that, not surprisingly, two main branches of thought on CDMA have developed over the last 30-40 years: narrowband CDMA and broadband CDMA. QCOM deserves credit for commercializing narrowband CDMA in the limited spectrum that was available in the early 90s, but it overreaches when it tries to expand the scope of those claims on broadband CDMA at a time when the global spectrum environment is much, much different. This is not an atypical situation in technology especially at a time when the pace of innovation is accelerating. Furthermore, in order to standardize and commercialize CDMAOne or IS-95, QCOM had to pool all its patents with patents from the likes of Oki Electric, Lucent and IDCC, who all have asserted their IS-95 rights in order to preserve their CDMA2000 rights. That means Qualcomm still has unresolved patent issues regarding its own platform!!! Most importantly, Qualcomm has no TDMA/GSM patents. There is no way to skirt around this issue. Even Qualcomm has admitted that they need TDMA/GSM IPRs. That is a key element of the deal that will eventually force Qualcomm to modify or abandon its oppressive license-one-claim, license-all patent regime implied by their flat royalty rate structure. Instead of the constant whining, some here should step back and use that as a key to sifting through QCOM's public posturing. Lastly, why is this royalty structure oppressive? The 5% rate seems reasonable enough vis-a-vis current GSM rates, but the problem is that all QCOM has to do to enforce its contractually fixed rate is to produce at least 1 patent a year despite the fact that key QCOM patents start to expire in 2006. While the easily impressed may view that as clever legal maneuvering, it's actually stupid considering the kind of hardening resistance that it has created within the global broadband community. Need I mention the bungled opportunities? The dangling prospects that always seem to be so near yet so far?