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

To: engineer who wrote (33043)	3/3/2003 6:03:44 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 197253

Re: Cost of GSM handsets compared to CDMA handsets. Are you saying that Nokia can make a cheaper handset than the equivalent for a CDMA system? It's hard to believe that there is that much difference in component costs, particularly if you compare a CDMA handset made in China with Nokia's equivalent product, or a Chinese product in which royalties considerably higher than QUALCOMM's must be paid. I can believe that Nokia's popularity is based to a great extent on brand recognition. But two handsets with basic voice capabilities, one for CDMA and one for GSM, can't be that much different in component costs. If they are, then what's the difference in actual numbers (estimates)? Art

To: engineer who wrote (33043)	3/4/2003 6:12:08 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 197253

Engineer, when QCOM is selling radioOne, with half the bill of materials, they'll capture perhaps half of that saving. I suppose GSM can do the same, so price competition might mean QCOM doesn't gain a lot. But since CDMA is becoming increasingly popular, radioOne must make a huge difference to CDMA handset competitive position compared with GSM. The famed 'economies of scale' which Nokia and GSM handset makers enjoy will go away when the phone is made out of plastic, a screen, an ASIC and radioOne. Halving the bill of materials is a very big deal. I can't understand the idea of cutting royalties when it seems to me they should be going up. We halve the bill of materials, which slashes the OEM wholesale price, which slashes our royalty income. Except that we can sell the clever ASIC with radioOne for a higher price, making up the difference. Cutting the royalty from 5% to 2% makes zero sense to me. I would put it up to 10% if I could. As you said, sales rates show the royalty isn't stopping CDMA. So does the price bid for spectrum in Europe. If royalties were higher, the service providers wouldn't have bid so much. If they were lower, they'd have just bid more. Mqurice