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To: Uncle Frank who wrote (272)	7/27/2002 4:18:28 PM
From: Eric L	Respond to of 562

Frank, re: QCOM and CDMA technology adoption << Could it be that Dr. J's assessment and the Q-tip's expectations for cdma winning over wcdma are being realized? >> Well ... Let us examine that. The expectation that Dr. J set for us Q-tips late in 99 was that the 2nd billion handsets (I'm as sure now as I was then that he meant the 2nd billion subscribers) would be predominately cdma. That of course will not be the case and I did not think it was a realistic projection when he made it. The 2nd billion subscribers (2002-2006) will be predominately GSM (using predominately GPRS enabled handsets). Probably the 3rd billion (2007-2010or so) will be split somewhat equally between GSM GPRS & EDGE & cdma (cdma2000 + 3GSM WCDMA) with maybe 5% being remnants of PDC & IS-136 TDMA. But that is not exactly what you asked. You asked whether cdma would win over wcdma. For the rest of this decade that could possibly be. That isn't necessarily very good for Qualcomm. The trick for Qualcomm is to have 3GSM (WCDMA) replace 2G/2.5G GSM and forestall EDGE as an alternative or supplement to WCDMA. Qualcomm's whole business model is based upon IP royalties (and amortized licensing) from all flavors of cdma (cdmaOne/cdm2000 and 3GSM DS & TDD WCDMA) and of course some percentage of chipsets for same. 1xRTT (or DO or DV) basically cannibalizes IS95-A/B - and hopefully attracts some additional users from the GSM/TDMA world as well as attracting new laggards like our friend MB. << Slowly of course. >> Slowly it is. At the conclusion of this year cdma subs will total about 150 million which will constitute approximately 14% of worldwide subs. This is good. It should be a market share increase after the 2 prior years in which cdma rate of growth trailed both IS-136 & GSM. GSM will total about 66% of worldwide subs with IS-136 TDMA, PDC, and analog splitting the remainder. The various research houses are calculating that cdmaOne/cdma2000 will grow to somewhere between 18% and 25% market share by 2007, with 20% to 22% being the general consensus. I was just reviewing a forecast from Deutsche Bank, FWIW. They are forecasting cdma growth relative to GSM more aggressively than most analysts or research houses: Deutsche Bank market share assumptions by technology for 2007 GSM WCDMA CDMA TDMA PDC Analog 2007E 69% 6% 24% 1% 0.3% 0% 2002E 66% 0% 14% 9% 5.0% 6% Source: Deutsche Bank Securities Inc. estimates and company information My personal feeling is that cdma "cdmaOne/cdma2000" "winning" over wcdma is a somewhat hollow victory, unless of course some carriers planning to migrate to WCDMA flip their decision which I consider to be a highly unlikely happening, or a major unannounced like China Mobile chooses a cdma2000 migration which I also consider highly unlikely (but not impossible). The advantage of that of course is that such a flip would provide Qualcomm with the strategic advantage that accrues from having architectural control of the technology employed by a larger user base than would be the case otherwise. BTW: UMTS forum is essentially sticking to the original forecast they made back in 1998 that 3GSM WCDMA will represent 28% of worldwide subs in 2010, even though it will be launching almost 1 year later than they originally anticipated. They were very conservative on forecasts for the anticipated 1st 3 years of WCDMA implementation ("UMTS Forum market studies have consistently assumed that 3G adoption will be slow in the early years and will only be used by less than 30% of the worldwide mobile-subscriber base by 2010."). Their forecast for 3G subs (WCDMA, 3xRTT - DO, DV - but not 1xRTT) is 254 million in 2007 and 630 million in 2010. Expectations made about cdma technology adoption by Qualcomm enthusiasts - myself included - back in 1999 were perhaps a tad exuberant. CDMA of one flavor or another will become the predominant wireless access technology, but "slowly" is perhaps the operative word. - Eric -