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

To: foundation who wrote (25127)	8/1/2002 7:41:03 AM
From: foundation	Read Replies (1) \| Respond to of 196652

DJ the Skeptic: Europe's Mobile Phone Dominance At Risk By Dow Jones Newswires , Aug 01 2002 Investors cheered when Spain's Telefonica Moviles SA and Finland's Sonera Corp. abandoned plans to launch next-generation mobile services in four European markets. But weeping might have been more appropriate, because the 3G retreat underlines how vulnerable Europe's lead in mobile phone technology suddenly looks. The U.S. enjoys a better 3G standard. Its mobile telephone companies aren't burdened with huge debt. The handset market isn't saturated. And as the mobile phone morphs into a tool for surfing the Internet, Microsoft Corp.'s (MSFT) Windows could replace European companies' software in handsets. Conventional wisdom - and investors - see it differently. For now. When Telefonica and Sonera wrote off a combined EUR9.1 billion spent on third generation mobile licenses, their share prices shot up 14% and 16%, respectively. Other European operators straining under the weight of about EUR115 billion spent on 3G licenses will likely follow suit. That would leave a smaller field of competitors, and everybody's profits would rise. True enough, to a point. Because by the time European operators finish restructuring, they may find themselves far behind U.S. rivals. Right now, European 3G is limited to Isle of Man and Monaco. Sonera plans a Sept. 26 launch in Finland. At best, most European operators won't have high-speed services road-ready until 2003. Meanwhile, U.S. carriers are rolling out 3G, and seemingly have a technical advantage. Carriers Verizon and Sprint use CDMA2000. European operators are committed to rival WCDMA. The U.S. standard already up and running, offering real services. In contrast, the European system remains in development. The U.S. approach is also cheaper. Verizon and other operators can launch high speed services by adding equipment to existing networks, removing the need for huge network investments. And they don't need new licenses, either. Not surprisingly, the U.S. standard is making serious inroads in other markets. Japan, South Korea and South America all have adopted it. The big prize is China. Although China hasn't chosen a 3G standard, China United Telecommunications Corp., the parent of China Unicom Ltd. (CHU), started a network based on CDMA technology. Any migration toward CDMA will hit Nordic equipment makers. Nokia Corp.'s (NOK) and Telefon AB L.M. Ericsson (ERICY) concentrate on WCDMA. Lucent Technologies Inc. (LU), Motorola Inc. (MOT) and, Qualcomm Inc. (QCOM), in contrast, are backing CDMA. Microsoft represents another giant threat. After the voice revolution, the next boom will be in data. Bill Gates' software giant has been aggressively courting phonemakers and operators to use its Windows Powered Smartphone 2002 technology. MmO2 PLC (OOM), a U.K. operator, recently launched the first color-screen phone running Microsoft software. Microsoft's target is clear: Finland's Nokia. If more operators adopt Microsoft's software, Nokia's 39% market share and fat 20% profit margins could come under pressure. Nokia is reacting. It's lobbying handset makers to adopt an operating system developed by Symbian Ltd., a consortium in which it holds 20%. The Finnish company just has brought out an impressive color-screen model, with a built-in camera. It's still too early to make a definitive assessment of who will win and lose the 3G battle. While the same mobile phone still can't be used throughout the U.S. because of fragmented frequencies, Europeans enjoy continent-wide service. And Europe's GSM still has 80% share of the overall mobile phone market. But the excesses of Europe's expensive plunge into 3G licenses won't be overcome with a few high-profile write-offs. Debt-laden European operators will continue to plod along, while U.S. operators race ahead. And the world won't wait for Europe to clean up its 3G mess. thefeature.com