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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: Keith Feral who wrote (2762)	9/5/2000 2:58:24 PM
From: EJhonsa	Read Replies (1) \| Respond to of 197341

The key resistance from SKT at this point appears to be their relationship with DoCoMo. You could also throw Nokia into that comment, given the "consulting" that they've been doing for them. SK Telecom definitely looks like the linchpin in the South Korean soap opera, as they appear to be the only operator there that, at this point, would most likely implement W-CDMA should the other two operators decide otherwise. Sales experience, marketing clout, and "connections" tend to matter a lot in regards to the decisions of large, bureaucratic corporations such as SKT. Nokia and DoCoMo had all three of these when it came to dealing with the company, and at some point a few months ago, it allowed the two to snow SK Telecom over with the standard pro-W-CDMA arguments (global roaming, join the rest of the world, free milkshake with every purchase, etc.). I guess the fact that, unlike the GSM-to-WCDMA operators, they won't be able to make use of their existing networking infrastructure (unless complete harmonization takes place by 2002), was lost on them when they made this decision. Now LG Telecom and Freetel had a serious dilemma on their hands, and it related to handsets more than anything else. As we all know, a large number of the world's leading handset manufacturers place the bulk of the product design resources towards the GSM market, so as to target the world's largest handset market first. Likewise, within a couple of years, these companies will devote most of their product development money towards the creation of W-CDMA handsets; and as wireless data takes flight, the amount of differentiation possible between competing handsets should grow to new levels. Here, it should also be kept in mind that since SK Telecom has over 50% of the Korean market, and since Samsung, by far the leading handset manufacturer for this market, depends on South Korea for a large percentage of its CDMA handset sales, that if SK Telecom were to use W-CDMA, Samsung would most likely be forced to shift much of its CDMAone/cdma2000 handset design resources towards the W-CDMA market. As a result, in terms of the number of quality handsets it could offer, SK Telecom would have a significant competitive advantage over LG Telecom and Freetel should the latter two stick to cdma2000, all the more so given its dominant brand and mindshare. And so the game was set. For this reason, the "lone wolf" scenario of one operator breaking ranks and chosing to go with cdma2000 seems unlikely to me. However, I still think it's possible that SK Telecom, realizing that the higher costs of going with W-CDMA (should harmonization not take place) probably won't justify gains made from potential roaming revenue from Chinese and Japanese visitors, will opt to reverse course, and will quickly take LG and Freetel along the way. Still, it's best not to assume that this is going to happen, as there don't seem to be any signs that the marketing job done by Nokia and DoCoMo is going to come undone. Eric