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To: JohnG who wrote (8991)	1/28/2001 6:56:51 PM
From: JohnG	Respond to of 34857

More Grim GPRS Humor. JohnG To:Ramsey Su who started this subject From: Benjamin Garrett Sunday, Jan 28, 2001 6:06 PM Respond to of 6665 "Now....how do you see this ((reported GPRS handset delays)) affecting CDMA takeup? ".... how do you see diminished confidence in the wireless sector and wireless data as a whole affecting an investment in QUALCOMM…Why?.." ---------- Eric, Wonderful questions! ---------- I believe the most powerful effect of Q's Thursday conference call was that it sowed the seeds for a fundamental change in perception regarding Q's relationship to 1) GSM dominant vendors and markets and 2) the wireless sector as a whole. This shift is typified by the caption: "Qualcomm tops profit estimates as others falter." - Message 15257214 . Ironically, I believe the foundation for this new perception - this reality - is grounded in Q's short term Achilles' heel --- the capsular nature of the 1x market. By capsular, I'm not suggesting that the 1x market won't grow within defined bounds (Americas, Korea, Japan, China, India, Viet Nam, Malaysia, etc.) - it will. What I am suggesting is that Q's markets are insulated from the profound disappointments that I believe are imminent in GSM markets. No matter what happens in Europe, Q has excellent prospects for meeting or beating earnings estimates - a message clearly telegraphed by management during the conference call. This recurring revelation will repeatedly delight analysts (aside from Snyder and Cabi) as the year wears on. The chasm in investors' minds separating GSM and CDMA prospects grows wider. If Parthus chief executive Brian Long's belief that the target for commercial quantities of GPRS handsets may have to be delayed until the end of 2002 is near correct - GSM Vendors and Operators will live a nightmare. Negative press - which to my experience is already plentiful - will swell. The European WAP public relations debacle will be dwarfed in comparison. Vendors - whose promise and pledge of performance was the foundation for GPRS development - might never fully recover. And it doesn't appear that European UMTS handset development is faring better. Europe does not exist in a vacuum - and European perceptions will be influenced by conditions elsewhere - especially Asia. In May, I'm convinced that NTT will indeed roll out wcdma services. How well the system functions may not matter. Initial services will be so tightly controlled within a select user group that actual system status may never be independently monitored or substantiated. But trumpets will announce the birth of 3G services - and Europe, and certainly its media, will listen and respond: "How is it that Japan already has 3G - and we're failing with 2.5G GPRS? IMT2000 3G is working in Japan - why do we toil with flawed, limited GPRS in Europe?" With "functioning" 3G in Asia later this year, Europe's focus and ire will be directed at GPRS and its Vendors - not 3G. Additionally, there will be press reports regarding 2.5G 1x in Korea - providing comparisons needed to sharpen the sticks used to skewer GPRS. How will Korea Operators respond to Europe's uncertainty? I suspect wcdma in 3G spectrum will be played down - even more than it has been recently - and that we will see more published pride and focus on its 1x networks. How will China - who has recently signed a few GPRS upgrade contracts respond? How will apparently serious GPRS problems influence prospects for 1x overlays on China's GSM networks - not to mention additional GSM network extensions? How will Europe's GPRS expressions of technical incompetence influence China's decisions for 3G? How will European Operators respond? How long until Operators call GPRS contracts with performance clauses into default? How will Operators perceive Vendors' past counsel, promises and prospective competence regarding 3G technologies? With wcdma blooming in Asia, how long will Operators agree to park their 3G spectrum on the shelf and throw time and money at troubled 2.5G technologies that, aside from not working, do nothing to address capacity problems? How will Operators' bankers, and their bankers' regulators feel about throwing cash and credit at questionable GPRS technology - with its growing credibility crisis? And in the Americas - what of T? AWE's I-Mode will undoubtedly be delayed - but for how long? How would no GPRS handsets for the foreseeable future affect AWE's already tortured upgrade plans? What of Cingular's publicized decision to follow in T's footsteps? How will developments bias Nextel's upgrade decisions? Will events spook prospects for GSM in Brazil's new spectrum? I believe the primary focus for Q is to assure that wcdma works in Asia. Asia is home for much of Q's value chain - and I suspect collaboration is in full swing. Ever pragmatic, as recently evidenced by the loosening of its proprietary grip over I-Mode content, NTT may well be receptive to Q chipset collaboration as the 5200 debuts later this year. In conclusion, I don't believe that GPRS's failure would cause diminished confidence in the wireless sector and wireless data as a whole. If the entire world was Europe (as they appear to believe it is) a resultant pallor over all things wireless might be possible. Or if wcdma was perceived to fail in Asia, this might be possible. But wcdma in Asia will be primarily perception for the near future - and IMO the perception will be easy to direct and control. I do believe that we will see diminished confidence in GPRS - and that responsible GSM Vendors will lose credibility. I believe that the media will turn to Asia - not Europe - to take the pulse of wireless. I believe that Europe's wireless sector is about to be thrown into recession - and those with vested interests will suffer. I believe that Europe's Operators will turn to 3G UMTS for salvation - and to Asia vendors and Q for technology to make it happen. ben