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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: slacker711 who wrote (52913)	11/8/2002 9:10:11 AM
From: Eric L	Respond to of 54805

Slacker, << They didn't make a decision to "reduce" royalties. ...Are you saying that if CDMA2000 had never been developed that these companies would be charging the same royalty rate that they are now planning? >> Essentially I am, yes, although it became clear in June 1997 that what is now called cdma2000 would be developed, and would be in play so that IF is rather hypothetical. << If so, I am going to have to disagree. >> Feel free. That is your prerogative. << The primary holders of W-CDMA IPR would have been more than willing to cross-license each other but they would then have gone out and charged all the other players a much higher royalty rate than they are currently planning. Nokia and Ericsson would love to be able to keep the primary players in W-CDMA the same as in GSM. >> This is where we really disagree. I think we need to review the strategic decisions that Nokia and Ericsson formulated internally within there own shops in late 1996 and began to act on in 1997. By the beginning of 1997 it became apparent that ARIB and the Japanese IT and Telecom vendors, influenced heavily by NTT DoCoMo intended to bring asynchronous WCDMA to market as their 3rd generation air interface for IMT-2000. By January 1997, both Ericsson and Nokia had determined their remarkably similar strategic direction and each independently approached DoCoMo with similar proposals. Essentially what they proposed was that they would back asynchronous WCDMA if DoCoMo would agree that the asynchronous WCDMA air interface would be based on an evolved GSM-MAP core network. [this proposal was accepted by DoCoMo in August 1997]. Essentially in proposing this they were opening up evolved "GSM" - UMTS, 3GSM, whatever you want to call it - to a whole new set of players in Japan [and by extension, potentially Korea]. The Japanese mentioned in the press release Fujitsu, Matsushita, Mitsubishi Electric, NEC, Sony, Hitachi, et al immediately became players in this marriage of Europe and Asia. When Siemens and Alcatel got wind of Ericsson and Nokia's strategic intent they scrambled together their own consortium including Nortel and Motorola to back TDD. In mid-August both groups agreed to base whatever air interface was selected on the GSM-MAP core. On January 30, 1998 11 proposals submitted to ETSI were examined and voted. No decision was reached on first ballot. The first of several compromises were made and on the second ballot a primary (FDD-DS) and secondary (TDD) air interface was balloted. 3GGP of down to the business of evolving the standard, the Chinese were accommodated with a commitment to harmonize UTRA-TDD with TD-SCDMA and the Koreans were accommodated by adding a synchronous option to FDD-DS Because "GSM" had already turned into a worldwide rather than pan-European game "ETSI re form" was already on the table. That finalized in 2000 with the transfer of maintenance of GSM standards to 3GPP. In late 1998 the UWCC announced their intention to join 3GPP (formalized in February 1999) and a worldwide set of players was in place, greatly expanded from the team that brought GSM to market. In Part II of Don Mosher's very good and very ambitious RTW Qualcomm epic which focuses on strategic advantage it is unfortunate, IMO, that Don ignores the real strategy development that took place in Europe and Asia, then America, so I though a very condensed review of what actually transpired was in order here. << Nokia and Ericsson would love to be able to keep the primary players in W-CDMA the same as in GSM. >> No. Nokia and Ericsson thought this all through and were fully cognizant of the fact that a greatly expanded set of players would be involved when they formulated their strategy way back when. << The royalty rates need to stay low for the primary players (to allow a varied market to develop) >> It does and that was recognized up front and as a consequence the 3G Patent Partnership was formed early on (with Qualcomm dropping out early). It is something of a mystery that the direction of that partnership is unclear at the moment, but the direction and mechanics set by that initiative may wrap in here shortly. << but after that there isn't much need to have 15-20 W-CDMA manufacturers. Much better for these companies (excepting Docomo) to limit the number of competitors. >> There is a natural order to things and there will be consolidation as a consequence, but even so, when you add the Chinese, Koreans, and Americans into the mix there will be 15-20 key W-CDMA manufacturers in the game (chips, infra, handsets, peripherals). << The fact that CDMA2000 requires a 5% royalty rate (I'll believe today's comments when companies start to sign up), puts a cap on what W-CDMA can charge. >> You are thinking like a Silicon Valley American with a San Diego hat. <g> Meantime, dem commuting Bears of yours darned near ate our Iggles last Sunday. Best, - Eric -