To: tero kuittinen who wrote (8274 ) 2/9/1998 4:43:00 PM From: Gregg Powers Read Replies (1) | Respond to
Tero, there are some serious flaws in your argument. QC certainly has not driven MOT away "with it's greedy attitude" nor was Nokia intent on self immolation when it based its first phone on an older form factor. Both of these companies opted to design their own chipset rather than source the MSM (mobile station modem) ASIC from Qualcomm. First generation silicon tends to be larger than fourth generation silicon (i.e. QC's chipset), hence the form factor disparity. MOT has been been booking a serious amount of CDMA infrastructure business, and I guarantee you that management would prefer to have a viable handset product to sell with it. Problem is, MOT's internally-sourced chipset has performed poorly in carrier field tests AND the lack of volume makes for an expensive, first generation chip and, subsequently, an expensive first generation phone. MOT is a quality engineering company that certainly will solve its technical problems; however, it will take time for them to ramp chip output and achieve economies of scale. This point should underline several important issues: (1) a subscriber-equipment license is NOT an ASIC license (i.e. Samsung could design its own chipset, and use it for its own phones, but it could not sell it into the merchant market), (2) the barriers to entry into the CDMA handset business are non-trivial, particularly for those not purchasing QC chipsets and (3) carriers typically go through an extensive certification process, calibrating handset performance, durability and attractiveness before releasing the product to the field--this creates a far more formidible barrier to entry (and new competition) than most analysts seem to appreciate.
