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

To: Art Bechhoefer who wrote (32950)	2/28/2003 10:30:43 AM
From: kech	Read Replies (1) \| Respond to of 197238

Art- It is hard to see the royalty issue as the critical issue in preventing CDMA2000 adoption since WCDMA is the same rate plus more to the other providers. Why do you think it is a key issue? I think the best explanation has to do more with other adjacent networks, political issues and some backward compatability links with existing GSM-MAP that the people on the Nokia thread talk about. I agree with you that on the margin a lower royalty might make some difference for some providers in say LA or China but am not sure how much of a difference. I would think the performance of CDMA2000 and examples of data ARPU would have more of an impact on adoption. The capacity and equipment cost advantages are far more important in considering overall installation costs. In addition, cutting royalties would definitely reduce the immediate earnings for shareholders and I am not in favor of that. Just some comments. Tom

To: Art Bechhoefer who wrote (32950)	2/28/2003 10:35:14 AM
From: Jim Mullens	Read Replies (1) \| Respond to of 197238

Art, Re:>>” The most successful way to deal with a strategy geared to hanging on to older technology as long as possible is to price the new technology low enough to discourage continued use of the more expensive older technology. This seems to be what QUALCOMM has been doing in China through the use of an extremely low royalty rate for domestic sales. A couple of years ago, I suggested that it might be to the advantage of QUALCOMM to reduce royalty rates for all licensees. Or they could reduce the rates for a period of one or two years in order to motivate laggards to switch. Personally, I'd like to see royalties of two percent or so in a market with 80 percent CDMA and 20 percent GSM, instead of the reverse. “<<< I believe your strategy might work in countries that are open to competition or where the GSM incumbents don’t have such a strong foothold. I doubt if even a royalty free use of CDMA in Europe with Qualcomm still holding the architectural control of the CDMA technology would have made any difference in the adoption of CDMA. The GSM folks (MEN) had a great enterprise going that virtually locked everyone else out with their cross-license agreements. Qualcomm and CDMA would have and does eliminate their tremendous advantage by leveling the playing field and therefore even without the 5% (approx) royalty rate would not have succeeded (IMO). Also, being a newer, richer, and more elegant (complicated) technology without the scaling advantage of GSM, 2G CDMA even at a 2% royalty rate would have resulted in higher priced handsets on average than their GSM counterparts. However, the whole ballgame changes with 3G CDMA 2000 as the good guys have the scaling and royalty advantage. JMHO- jim