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

To: quartersawyer who wrote (53078)	7/2/2006 9:07:09 PM
From: kech	Respond to of 197011

A report from India with a little perspective on things: CORPORATES & MARKETS US company bets on new chipset to woo operators N SHIVAPRIYA Posted online: Monday, July 03, 2006 at 0000 hours IST Send Feedback E-mail this story Print this story MUMBAI, JULY 2: Qualcomm is betting on its new chipset and 3G-technology adoption (WCDMA) to woo operators back into the CDMA fold. The new chipset is expected to lower handset costs significantly. According to Jeffrey K Belk, senior vice president, marketing, Qualcomm Inc, the chipset named QSC or Qualcomm Single Chip, will make sub-$40 CDMA mobiles available. Currently, the lowest CDMA mobile handset is available from Tata Teleservices and is priced at Rs 999 to the subscriber. However, this carries a subsidy of about Rs 1,000. Interestingly, India is likely to be the first market where handsets based on the new chipset will be launched. The chip is currently undergoing engineering sampling and handsets will be available by December, the company said. The chip and the company's technology roadmap was one of the matters discussed by the Qualcomm chief executive, Paul Jacobs, with operators during his visit here. Although, higher royalty payments for India has been the centre of the controversy surrounding CDMA, the impact of royalty on handset prices is not very significant. At a recent meeting, Tata Teleservices CEO Darryl Green said these claims were exaggerated and that Qualcomm needed to make the chipset at a lower price that would reduce component costs. Chipping In • New chipset: Will make sub-$40 CDMA mobiles available • On global radar: India accounts for 8% of its market in unit volumes The QSC will be available in 3 tiers, Belk said. The first tier (QSC 6010), which supports voice and SMS, will make sub-$ 40 handsets available, while second tier (QSC 6020) will support music and the third (QSC 6030) camera. Belk said he expected no appreciable price difference because of local manufacturing. Qualcomm has annnounced that an Indian manufacturer will source chips from Qualcomm for local manufacture, although it has not revealed, who the manufacturer is. "However, there may be a marginal price differential because of design and testing cost savings," he said. Qualcomm's primary revenue earner is chipset sales, not royalties. India accounts for 8% of its market in unit volumes and about 2% of its royalty revenues. Belk said he could not comment on whether this will come down following Reliance Communication's decision to move into GSM. Analysts believe although Reliance intends to continue with CDMA, further expansion and investments in CDMA will suffer because of its GSM foray. Jacobs and his team have returned but a company official familiar with the developments said discussions with operators are still continuing. "We may make an announcement next week," the official said.

To: quartersawyer who wrote (53078)	7/3/2006 3:16:37 PM
From: Art Bechhoefer	Read Replies (1) \| Respond to of 197011

chapq--It's clear that Nokia and its allies are attempting to eliminate CDMA and CDMA2000 as viable systems by claiming incompatibility and higher costs. If they are successful with the Indian government, other major telecom providers will go along with the GSM standard, despite its limitations, and eventually QCOM will be forced to lower its royalty rates just to keep existing customers. All the lawsuits and related actions seem aimed at this outcome, in jurisdictions where Nokia believes it has a good chance of success. I'm not sure what the best strategy is against this kind of treatment (which one could argue amounts to tortious interference with a business). But one strategy would be to notify the recently elected Republican Congressman from San Diego and advise him of the consequences faced by the largest employer in San Diego. Another strategy would be to do exactly what QCOM has already done--file actions against Nokia for infringing certain QCOM patents that are used in GSM and related systems, and against BRCM for infringement related matters. This wouldn't provide any direct help regarding India, unless the Indians come to understand that even some GSM systems, together with WCDMA upgrades, will have to pay royalties to QCOM. My own view over the last couple of years has been that QCOM should have REDUCED royalty rates in order to reduce the incentives these guys have for avoiding payments altogether. Even if this means reduced near term net profits, at least it ensures growing and widespread applications for CDMA and all other variants. The biggest disadvantage, it seems to me, is lack of a single billing mechanism when using GSM or CDMA systems. The compatibility from chip design helps deal with the problem, but a single billing system would definitely be a step in the right direction. Right now, it seems that Vodafone customers can use a special handset for WCDMA or CDMA, giving them access to certain systems in Europe and the U.S., but still less compatibility than is possible with GSM. Whether that issue can be dealt with at a reasonable cost is unclear at this point. Art