Hi wstera_02,
Pat yourself on the back for a splendid post. Very well presented.
I reckon A.L.'s opinion and yours ought to be one's I respect and pay attention to, but, but, but, I must say, I think you gave short shrift to the real concerns expressed in the Red Herring article. What I read, and what you did not address, is that Dr. Jacobs is in the middle of a perpetual negotiation with an adversary who, as the article points out, holds all the high cards. Dr. Jacobs is merely an acolyte at the altar of commerce, Chinese style. And the Chinese style is to play ping pong with the emotional state of its suitors in order to achieve the greatest advantage. This, of course, has absolutely nothing whatsoever to do with the technology, (and I'll dispute part of your tech argument below) and it has everything to do with power, politics and influence. You may not think it is significant that China Unicom is the equivalent of a CLEC in the US, with less than 7% of the cell phone market, according to my latest data. It is going up against the incumbent carrier, who again, holds all the cards, has zero interest in Q*'s CDMA and is the darling of MII, the Chinese equivalent of our FCC. So, Dr. Jacobs is trying to suck up to the second fiddle, is about the way I see it. In a very difficult political climate. So, whether or not CDMA and its variants is a superior technology is a battle I don't want to fight. I just want to get the business and political reality correct and the cards will fall where they may on technology. Remember, great technology and great success in business are not even close to being synonymous. Mr. Softie is prima facie evidence of this.
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Now on to the technology issue. You state: CDMA2000 1x (2.5G) & CDMA2000 1xEV will dramatically increase the voice & data capacity of the same spectrum. CDMA's superior voice/data capacity, soft hand off & other patented features make it clearly superior to GSM, TDMA & analog.
I have a subscription based telecom newsletter and one of the interviewees recently was Gary Pinkham, VP for Investor Relations and Business Development at Ericsson. I find that he has a completely different take on things and I am left somewhat baffled as to which side, (i.e. Q*, Jacobs, Gilder & wstera-02 vs. ERICY) is actually getting closer to the truth. Here's part of the interview:
Q: And would you help me understand why someone like (Gilder) touts CDMA as "a superior technology" (when) from your point of view it hasn't been such a technology. At least it doesn't have the market penetration that you would expect. Why is that?
Pinkham: Well, I believe that wireless is about how atractive you can make the applications and how you can create an economy of scale in terms of volume market acceptance. And in the narrow band world, this second generation, there's no really significant difference betwewwn the capabilities of GSM, TDME or CDMA. It's all more or the the same or equivalent, if you will.
Q: Why?
Pinkham: Because its' all the same bandwidth, and it's just mobile telephone service. Looking at the field you ask which has the biggest volume, from which you can get an economy of scale.
Q: But you also were linking it to applications? Would you expand on this a bit?
Pinkham: Again, the consumer doesn't care what the technology is. Consumers just care about how the application works, how good the quality of the service is and so on. This is because at the end of the day, no matter which technology you use in the second generation, they're more or less equivalent. [Emphasis mine.]
Q: With regard to 3G, the reason to upgrade is to make networks more data-capable, more multimedia, more Internet-capable?
Pinkham: And also more capacity for voice services.
Q: When you say more capacity for voice, how does that affect the single user?
Pinkham: Because the more users you have, the more users you have within a particular area, and every user consumes some of the radio spectrum available to that area. So you need mored capacity to handle more users. And the trend certanly is such that the number of mobile users is going to exceed the number of wire line users by a significant amount.
Q: But you are talking now about a CDMA or a TDMA technology?
Pinkham: Both.
Q: But I thought that, because of the code division multiplexing capabilities, CDMA could theoretically at least do an easier job of getting more users into a given amount of spectrum.
Pinkham: This goes back to the kinds of games that technology people can play. To a certain extent, that could be true, but then when you get a fully loaded network, the TDMA has the same capacity as the CDMA network. [Emphasis mine.]
Q: Why is that?
Pinkham: Well, in CDMA, everybody broadcasts at the same time, sot the more users you have, the more they interfere with each other and then you have to have smaller and smaller cells to have better coverage for the users. TDMA takes a different approach. They have what's called pico cells or hierarchical cell structures. You can have pico cells, regular cells or macrocells, so it's an umbrella kind of effect. With CDMA you just segment the cells and make smaller and smaller cells. So when you get through all that process, you still at the end of the day have more or less the same capacity. [Emphasis mine.]
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So what does all this mean? I reckon it means that I don't see the mighty Q* with quite the rosy spectacles that a lot of SIers seem to. I see an uphill battle for an upstart company that tells a good story, but has never gotten the ear of any of the incumbent carriers anywhere in the world. I don't mean to be disparaging. I just mean to pay attention to the facts.
Best, Ray :) |
