Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: JohnG who wrote (120199)	6/12/2002 9:59:57 AM
From: hueyone	Read Replies (1) \| Respond to of 152472

online.wsj.com Qualcomm Aide Says Weak Launch In China Doesn't Mean CDMA Failure By H. ASHER BOLANDE Staff Reporter of THE WALL STREET JOURNAL HONG KONG -- China Unicom Ltd.'s disappointing initial performance at attracting subscribers to its new mobile service based on CDMA technology doesn't mean the operator's $2.5 billion network has flopped, an executive of San Diego-based Qualcomm Corp. said Wednesday. "This whole rush to judgment on Unicom is incredible," said Paul Jacobs, the president of the wireless and Internet group at Qualcomm -- which owns the technology patents to CDMA, or code division multiple access. "The battle's not over." Unicom, the publicly traded arm of China's No. 2 cellular provider, has signed up roughly 700,000 subscribers since it launched CDMA service in January -- well off the pace for its original target of several million by the end of the year. Previously it and rival China Mobile (Hong Kong) Ltd. only offered services on an incompatible standard, Global System for Mobile, or GSM. The slow take-up has damaged company's share price, already weighed down by skepticism about the mammoth CDMA project, blasted by critics as redundant. But Mr. Jacobs said Unicom's CDMA gambit would only pay off once the operator upgrades its service to CDMA2000 1x later this year. Comparable to third generation, or 3G, technology, 1x enables computer-like data speeds, enabling new-look wireless Internet services on cellphones, such as downloads of music, color photos and games. "If you're selling voice against voice, it's about price," he said, conceding that Unicom's CDMA service cannot compete with GSM services on that basis. Only when 1x is introduced will CDMA provide Unicom with a differentiator from its rival's service. "There's a minimum of 18 months where CDMA operators have a clear advantage over everybody else," added Mr. Jacobs, who is the son and heir apparent to Qualcomm's chairman and chief executive, Irwin Jacobs. As the world's biggest cellular market, China represents a pivotal test case for Qualcomm, which is trying to win over more operators worldwide to its CDMA technology. Edison Lee, a telecom analyst with CLSA Ltd., agreed that 1x will give Unicom an 18-month lead on introducing the China market to mobile-data services but said the upstart still faces a difficult task winning high-spending customers away from China Mobile, the incumbent with nearly 70% of the country's subscribers. General packet radio services, an upgrade to GSM, will allow China Mobile to catch up in terms of handset features and availability by the end of 2003, he predicted. In Korea, where 1x's popularity is growing, color handsets have been the driving force and sell for US$300-400, Mr. Lee said. "How many in China will be willing to pay that price, change their phone number and maybe not get as good network coverage?" Mr. Jacobs described Unicom's initial problems with CDMA coverage as temporary teething pains. "It's pretty understandable why they're where they are," he said, adding that Unicom had rapidly undertaken the largest-scale network roll-out in history. He said Unicom's dependence on new handset makers was to blame for the comparatively high price and availability problems of CDMA phones in the initial stage. The 19 manufacturers -- all but one of which are China-based -- have yet to achieve economies of scale, fully amortize product-development costs and establish strong distribution networks, he said. Because China's government set unique new specifications for the country's CDMA phones, Unicom was unable to import existing models from South Korea or the U.S. Write to H. Asher Bolande at hyam.bolande@wsj.com Updated June 12, 2002 9:02 a.m. EDT