Tero, Tora, Tora. Good point that Korean cdmaOne manufacturers will be able to undercut USA makers now that the Won is wan. Of course, that is not all bad news for Qualcomm which will still collect the royalties and ASICS sales. No worry for them if Samsung, LG, Maxon and others make those sales instead of Motorola, Philips, Japanese and other licensees. Sorry about the speling Mike D, but I try to spel American, like Chuckj. American is quite different from English and seems quite capricious, arbitrary and random, approximate, variable and creatively ambidextrous. Licensees, licencees, licensese, Japaneese?
Anyway, since the labor [labour] content in cdmaOne handset production lines is relatively small, the wan/US$ rate is no big worry. Also, unlike the bad old days, when exchange rates were fixed and politicians could rip their economies around with a bit of monetary manoeuvering [manuvering?], nowadays, everything is pretty slippery and all they can do is print or not print more dinero [moola, spondoola and other technical terms]. Everyone then responds by leaving town, moving their money, selling their equipment, increasing production elsewhere and stuff [stuph? stough?] like that.
So really, no sweat with this Korean business. The USA prints some more $. Already a done deal. Ships it over to Korea via banks, loans to Korean government which then prints more spondoola [won? wan?], Qualcomm, North Korea amalgamation guarantees and the like. It gets loaned on to the deadbeat South Korea speculative gamblers who lost or given to defunct companies in exchange for equity, purchasing agreements or the like.
The losers are the US$savers [lenders] who get diluted in the same way that shareholders would be diluted if Qualcomm printed another 20 million shares and gave them to their friends. Or themselves if they copied politicians. Of course, the Fed is diluting dollar [greenback?] holders to the tune of 15% per year anyway. This is just a Xmas bonus. The poor suckers [lenders] holding greenbacks don't notice they are being diluted because people like my idols at Qualcomm and Microsoft [Bill Gates especially - get off his leg qdog!] are increasing the action you get for your dollar very very rapidly. Faster than the Fed can print. So Bill and Irwin [and me] get your money by way of sales, the Fed gets it by way of printing [dilution?] and you get some great products for more hours work than you should have to do.
What depression? If Korea drops from GNP increase per year of 8% to 3%, it is hardly a depression unless American is really diverging from English into a fully new language complete with new meanings. Depressions used to mean an actual drop in production.
The cdmaOne systems are hardly experimental Tora. They won't get the ax [axe?]. They are being checked out preparatory to buying big. Why should China or others opt for a more expensive GSM system which doesn't provide as good quality calls for subscribers?
Then on to the handsets. You say that GSM handsets are hot stuff and Nokia is amazing. Surely you think that Nokia will be no less brilliant in their design of cdmaOne handsets. But discussing handsets as though they are a limiting factor for cdmaOne is pointless. There are many handset makers licensed for cmdaOne [not Ericsson] and Nokia is one of them. They will ensure they have a big market share. Philips intends doing the same. Motorola have been trying. Others are too. Nokia will not be thinking cdmaOne will fail.
cdmaOne has a huge advantage over GSM air interface. The rest is just a bunch of wiring [um, I guess that is a bit rude to the people who produce amazing things like PureVoice, but you know what I mean]. Although more effort has gone into GSM air interface handsets, the technical expertise is transferable. Nokia will transfer their handset brilliance to cdmaOne handsets just as fast as the market develops. Which will depend on the advantage the cdmaOne air interface has over GSM. Which is increasing day by day.
Tero, you said: "This will destroy the profit margins for the whole sector..... Much of the production capacity has already been built and
the R&D expenses paid for - there is no turning back. Phones that were designed to make profit at 60% higher rate of won can be priced at pretty much any level to gain maximum market share".
This is logically inconsistent. It won't destroy profit margins for the whole sector because, as you point out in that quote, the phones [fones?] were designed to make profit at 60% higher rate of won [wan? cdmaWon?] but can be priced at pretty much any level to gain maximum market share. While still making pretty good profit [prophet? Winn?]
But it will destroy profit margins for Ericsson, Nokia and other high priced producers. But sad though it may seem from the viewpoint of Finland or Sweden, where these two do represent the whole sector, they are just two of a multitude of handset makers. And Ericsson isn't even a cdmaOne handset maker so they are dead before they start as they can't cut their cdmaOne handset prices at all. And cutting their GSM and analog handset prices won't help.
Enjoy some winter saunas! Bet it's cold there now.
Mqurice
PS: Mike Doyle and other panickers [panicers, nail biters, worry warts, margin-traders, $72 Qcom buyers] - don't worry. This is just part of the long tradition of Qcom roller coaster rides. They must be designed specially for me and Ramsey to go shopping once or twice a year. There are many sardine traders buying and selling Qualcomm, using their computer programs and maths PhDs to outwit the rest - they need high volume and high volatility to do their work. Don't fund them by selling. 11 million shares in a day is the biggest there has been. They are all out now, especially if you add in the previous few days trading. Thanks to the person who kindly sold me some on Friday for $51.25. I have a half dollar paper loss on that so far. But I'll still own those shares in July when the amazing cdmaOne sales of 1998 will be well underway and Qcom will be nearer $90 than $50.
I saw your threat Mike! Speling corrections included hear [here, heir] for your edification.
Regards to all, over and out,
Mqurice.
---did you really read all the way to here [hear, heir, hair, which falls out in handsful if you put cyclophosphamide, vincristine, adriamycin in your blood but doesn't badly affect having a great time at a cdmaWon wave function at Piha on a beautiful sunny day, fighting the ocean]. |
