So, what will be needed is the 3G, to use the states as an example, Mr. and Mrs. main stream America will the need the WOW factor of 3G to upgrade in masses, so I see a slowing of appreciation or sideways movement for the cell group till that happens.
Greg, with all due respect, I think that's the flaw in your argument: you're using "Mr. and Mrs. mainstream America" as the basis for your claims. The US handset market is much, much different from that of most developed nations. For all intents and purposes, it's the developed world's wireless backwater. In spite of the far higher penetration rates, handset sales growth is still higher in Western Europe when compared to the US.
This stems from a confluence of factors hampering growth in the US market, including a huge analog base, the world's finest, most inexpensive land-line telephony system, and perhaps most important of all, a lack of the feature-rich phones available for the GSM 900 and 1800 bands (i.e. Nokia 7110, Siemens S35i, Ericsson T28) We don't have SIM cards over here. We don't have SMS. Hell, we don't even have alarm clock features! Not only has all of this directly impacted the replacement rate in the US by giving subscribers less incentive to upgrade, it's also had an indirect effect by lessening the emotional attachment the average American has with his/her phone. From a psychological standpoint, a large number of Americans, especially those in analog-laden "mainstream USA," still look at their phones in a highly utilitarian manner, as devices that they use for the point of making phone calls. They have just as much of an emotional tie to them as they do to their refrigerators, their radar detectors, and their toasters. Which is to say, none.
Europe and Asia, to say the least, are far different stories. Most people there have as much of an emotional attachment to their phones as they do to their clothes, their watches, and their cars. Which is to say, a lot. Their phones become an outlet by which they idnetify themselves to others, and thus they want to make sure they have the most attractive, feature-laden phone that they can afford. Furthermore, as phones become take upon more and more new features, this trend actually accelerates. Just look at what's happened in Japan over the past year. With the advent of i-mode, replacement rates are already near the one-year mark, and the amount of personalization allowed for by leading handset models is at a new level.
With all of this said, I hope that you can understand why I think that GPS and Bluetooth, and the PDA software that'll come as a result of the latter, should be enough to create a "2.5G" upgrade cycle in most of the developed world, even though 3G and streaming video will most likely be needed to jolt the low-end/lower mid-tier US market.
I as stated to UF, congrats by the way you deserve you award, that the high-tech sector that has been largely driven by the PC, cell sector, and communication sector is going to end up losing another of the drivers, Cell phones, which leaves the build out of broadband wireless and wireland, which will be the next big thing. Well, that's how I see. In order to make money in the market, ones needs try to understand not what is happen now, ones needs to be looking out 6 to 12 or more months, so I have adjusted my account to align with how I see it.
I guess that depends on what kind of growth you're expecting. For a lot of people, 40% still isn't too bad, and I think a number of "pure wireless" companies, including Nokia, could easily eclipse it as a result of higher ASPs for their products. As I've already stated, I try to look for 58% long-term earnings growth, and I think that Nokia will most likely fall a little short of that mark. But 45-50% earnings growth still isn't that bad for a lot of people.
Meanwhile, Wall Street, in its infinite genius, has valued Qualcomm (at least on a relative basis) as if the company's never going to profit anywhere except from its existing markets. Sure, their ASIC market share for W-CDMA won't be as high, and they probably won't get royalties on some of the core W-CDMA infrastructure equipment, but they're still set to make a killing once DoCoMo, Vodaphone, Sonera, and all those other non-CDMA operators start upgrading networks in the next couple of years. The fact that the first W-CDMA handsets will be bought by high-end users, and that they'll inevitably have to be dual-mode (PDC/W-CDMA) or tri-mode (GSM 900/1800/W-CDMA) should make the royalty picture even better. Thus Qualcomm's growth should accelerate rapidly, and perhaps even rival that of the broadband pure-plays that you talk about.
Eric |
