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

To: Gus who wrote (5912)	6/29/2000 1:41:00 AM
From: The Verve	Read Replies (1) \| Respond to of 34857

Gus, You hinge your argument on the assumption that all GSM carriers will upgrade through a WCDMA path. Why is this so clear cut? 1) WCDMA appears nowhere close to be ready, for all intents and purposes, it's still in the lab. 2) WCDMA may NEVER get off the ground. 3) WCDMA, if it ever works, may not be able to move bits even at the snail pace of 300 something K. I've heard some engineers are speculating they're only able to get data rates around 100K in those beautiful van phones. 4) WCDMA, on the royalty side, is probably gonna be very EXPENSIVE, with every Tom, Dick, and Harry clamoring to grab their pound of flesh. Qualcomm has said many times, they're not gonna budge from their 5%. So let's say, in 2002, carriers are ITCHING to begin recouping those 3G spectrum costs. They gotta get this stuff going, NOW! What's gonna happen to those Euro carriers if: 1) WCDMA is STILL not ready. After promising delivery in May 2001, and a year later it's still not available, how's that gonna look? Would you wanna do biz with a contingent whose intentions are good, but just CAN'T deliver? 2) WCDMA royalty costs are 15, 20, 25% OR MORE. So the product is significantly more costly than the other 3G option. My prediction....you're gonna see one or two carriers roll the dice on a shiny new CDMA 2000 network, that WORKS, that is PROVEN, that has data blazing along at EXCEPTIONAL speed, whose royalty cost is only a FRACTION of WCDMA's, and is READY NOW. It only takes one or two major carriers to make that committment, and you'll watch the entire Euro continent follow. Of course, if I'm wrong about WCDMA, if it's not true that the phones barely fit into a cargo van, if it's not true that they run HOT, if it's not true that the data rates SUCK, if it's not true that the IPR claims are a big mess and will likely need to be litigated...if none of that is true, I think WCDMA has a good shot of being an upgrade path for GSM operators. Still fine by me. If WCDMA DOESN'T happen, however, that sure will be a bunch of wealth lost down a rat hole, wouldn't you say? NOK CEO's mea culpa was very telling... The smart money is beginning to take notice. Verve

To: Gus who wrote (5912)	6/29/2000 8:22:00 AM
From: JohnG	Read Replies (2) \| Respond to of 34857

Gus. The simplest way to put it is to say that QCOM has adequate intellectual property to manufacture and license 3G in the form of 1X MC and probably 1X MC w/ HDR. This is a working, proven technology that delivers the voice/data combination better than any other competitive technology including DS CDMA. Others are working on an inferior technology called W-CDMA and apparently some such as ERICY and NTT have enough intellectual property to market this while paying QCOM net royalties of roughly 5%. NOK, unlike ERICY and the NTT suppliers decided to try to skirt the QCOM IPR and develop their own. Their efforts failed. Meanwhile, QCOM has proven out !X MC, 1X MC w/HDR and probably 3X MC. They need nothing from anyone to deploy these technologies and are proceeding to deploy them. In short, QCOM really doesn't need anything NOK has to proceed. Thus it can simply walk away from any negotiation with NOK. NOK desperatly needs what QCOM has--3G ASICS that work and 3G IPR. In such a negotiation QCOM thus has a 10X stronger position than NOK. NOK has reached this point in life by procrastinating, being insular and inward looking and being a fat, happy Know-it-all in denial that the world has changed. NOK is stuck with three problems: 1) It has no workable 3G hardware solutions compared to ERICY and NTT 2) It has inadequate 3G IPR to deploy these hardware solutions if it had them 3) It is making so much money with GSM that it is fat, dumb and happy---blinded to the future directions of wireless. A huge profit has covered a lot of sins at NOK. NOK has one thing going for it. That is the fact that QCOM is not NOK's competitor. QCOM is a CDMA development company and its goal is to make a profit spreading CDMA throughout the world. QCOM will be happy to allow NOK to help them do this, but, if NOK has no interest in doing so, QCOM will be happy to see NOK go their own way. But, now that time has passed, QCOM's IPR is much more valuable than it was years ago. So NOK should not expect to pay the same low 5% royalty that others pay. In short, NOK's negotiating position becomes weaker every month it procrastinates. If the so called, consortium, values the antique GSM intellectual property at 15% royalty (which they used to prevent competitors from entering their market, then QCOM's 3G technology which transfers data at many tines this rate, is worth 45% royalty simply because it supports much higher data rates than GSM, EDGE, GPRS on the same amount of spectrum. There are numerous companies in Japan, US and Korea that are developing appliances and killer applicatons to use this bandwidth. If history teaches us anything it is that there is an insatiable demand for bandwidth and uses rise up to consume more and more bandwidth. Physics teaches us that spectrum is like land -- all the spectrum that will ever exist is here right now. Thus we must use it effectively and to do that, the crowded areas of the earth (like major cities) need to switch to CDMA. All NOK can say to this is that the majority of the world uses GSM. And this is akin to a early 1900's horse trader saying that the majority of the world rides horses rather than automobiles. Also there is the bit about being able to take one phone to different parts of the country or world and use it on both GSM and CDMA. QCOM proposes to solve this by adding Subscriber Identity Modules to its phones for China. It would be nice ot develop a combo GSM/CDMA ASIC, but the market for this product is becoming smaller and smaller as nation wide CDMA networks roll out aound the world.