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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: pann1128 who wrote (27244)	7/4/2000 9:07:45 AM
From: Eric L	Read Replies (1) \| Respond to of 54805

Piyush, << I am having a hard time figuring out where the growth is coming from in your scenario ... You cited a CDG forecast which calls for CDMA growth of 67% CAGR over five years. Most analysts, including the QCOM bulls have whittled down their estimates for next year to a 20% growth rate. >> First, I am referring to net subscriber growth, not revenue or earnings growth, but net subscriber growth drives handset unit growth (which is much larger than net subscriber growth due to churn sales and replacement sales) which in turn drives revenue (ASIC sales, license & royalty fees). The forecast I am referring to was presented by Terry Yen of CDG in March and prepared by Volpe Brown Whelan and Company . The forecast is high level (2 charts) unfortunately, but I find it very credible particularly since it does not include the China wild card where sales will most certainly (probably <g>) derive 2002 forward, and perhaps even starting in 2001. The forecast (and my summary ) can be linked from here: Message 13732501 The majority of subscriber net adds will come initially from CDMA's 4 largest markets, Korea, US, Japan, Mexico, but will be supplemented by growth in EMEA and Latin America. While the actual growth rate of CDMA is slowing down, it is still the fastest growing technology in the world. TDMA is slowing down but holding its own because of Latin America, and GSM slowing down more. The major cellular markets of today are seeing some saturation, which makes growth in LA, Africa, China, et al very important. Much of CDMA's growth is coming at the expense of analog (or in Japan some PDC) and there remains a huge base of analog in the Americas. CDMA is also catching some churn from GSM & TDMA, particularly in the Americas. << If GPRS is going to become the dominant air interface before 3G(WCDMA dominant) takes root >> GPRS is essentially an overlay of GSM (although new GSM systems will deliver with GPRS). GSM growth is declining. CDMA (and TDMA) is taking some of its potential market share in countries where it is not mandated. Brazil will be interesting. Whether or not GSM will occupy 100% of the new 1800 MHz spectrum will depend somewhat on who bids for the 3 licenses. If it is SK Telecom or Bell Mobility/Telemex it could be cdma-1800 rather than GSM-1800. Hard to say but interesting. << No new carriers seem to be adopting CDMAOne or 1xMC >> There are some each year. CDMA needs more. The carrier user base is certainly much smaller than GSM but larger than TDMA which is dominated by AT&T, SBC, Bell South. CDMA (and GSM) are in an awkward period (transitioning generations from 2G to 2.5G). Neither GPRS or 1xMC are quite ready to go and EDGE further away yet. Infrastructure ready and shipping but no terminals. Slight edge to GPRS which has been shipping infrastructure since last fall but they are severely handicapped on the terminal side. The cdmaOne/cdma2000 migration path on the handset side is much cleaner and this will be a big advantage. Next year will be interesting. 1xMC will be commercially installed and will permit 144 kbps packet data and by the end of the year MSM5100 chips should be shipping that will support a R-UIM for global roaming, very high data rates (peak rates up to 614 KBPS) and multimedia features. HDR? A positive kicker when standardized? 1xEV (1X evolution)? Another positive kicker when standardized? Implementation cost will have a big bearing on new carriers (or new networks) building out in existing spectrum, but from this point forward 1xMC appears to have some significant advantages over GSM, 1S-136 TDMA, and maybe TDMA EDGE. The elusive CDMA dream. CDMA overlays of an existing GSM Net. We have never seen one. Could we? That is a discussion for another day .... Regards, - Eric -