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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: 100cfm who wrote (139748)	10/31/2005 12:10:04 PM
From: JohnG	Respond to of 152472

100CFM -- concerning "they in fact are getting a royalty on GSM" GSM only phones are cheap and have low multimetia capabilities. WCDMA phones are very costly and have substantial multimedia capabilities. Subscribers purchase costly WCDMA phones for the WCDMA, not the GSM. They are willing pay a higher phone price so they can have the WCDMA multimedia capabilities. They pay more for WCDMA despite the fact that WCDMA coverage has gaps. When they are in GSM only areas, they could theoretically pull their SIM card out of the WCDMA phone and stick it into their worthless old GSM phone. As long as this is an option, it is really hard to argue that QCOM is receiving royalties on GSM. QCOM does not make GSM phones, but it is licensed to include GSM in WCDMA phones so as to allow continuity of coverage during the time period GSM is phaseing out. The value of that continuity of coverage is added , not by NOK, but by the cellular operators that seek to provide high quality service while they switch out old GSM equipnent. The royalties QUALCOMM negotiated with various GSM patent holders represent the differential value of WCDMA patents QCOM holds and GSM + WCDMA patents the GSM companies hold. One could argue that QCOM should value WCDMA intellectual property quite highly at this time versus 3 years ago because 1) all the spade work is complete and the market is now ready to pop 2) the WCDMA market is potentially larger than the CDMA2000 market. QCOM certainly worked hard to field a workable WCDMA technology-- as I recall, it was QCOM that provided all the test phones to the aspiring WCDMA operators. THe value must have been there o else, NOK would have used their equivalent proprietary technology instead of licensing QCOM patents. The complaint that QCOM is charging China a low apx 2.8% royalty on phones sold in China ignores the fact that 1) QCOM charges Chinese manufacturers some 7.5% on phones sold outside of China and 2) QCOM has offered Korea and probably others this same royalty scheme. I suspect NOK could get this same two phase royalty deel if they so wanted it. No, they don't want the same deal as China. Nok just wants to pick and choose half of the deal. Has QCOM forced China to buy its chipsets exclusively. I don't think so. At the time the statement was that China would purchase QCOM CDMA 95A/2000 chipsets so long as QCOM remains competative. Unfortunately for NOK, QCOM shows every sign of being very competative in WCDMA chipsets. The prices of WCDMA phones are falling AND now QCOM has them scared shitless with its low cost CMOS 6245 "value" chipset to be sampled in Q2 2006 and with its arguable lead in HSPDA (as it promised Cingular early development of a working HSPDA so Cingular can compete with EVDO). You can only conclude that this bunch of companies is heading for the European Socialist Commission to get government help to suplement their slowfooted chip development. One can argue that they see their GSM monopoly and 16% royalty barrier to entry falling apart because numerous WCDMA phone makers world wide will use innovative QCOM WCDMA chipsets to bring the price of WCDMA phones sharply under $200. Thus they run to the European commission for help.