Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: DaveMG who wrote (11062)	6/2/1998 8:00:00 PM
From: gdichaz	Respond to of 152472

On the "manufacturing problems" , may we pause for a moment to think about that paragon Intel and Merced. Glitches occur. The idea that the Q has bad management because a couple of suppliers goofed on the innards of phone parts, pales in comparison to Intel's track record. Lots of "glitches" there. How about some realism re the difficulty of any design/manufacturing process, hmmmm? Chaz

To: DaveMG who wrote (11062)	6/3/1998 9:41:00 AM
From: Gregg Powers	Respond to of 152472

David: Obviously there are subtleties beyond the binary position that I presented, but I am extremely comfortable with the general conclusion. The GSM platform is important economically, technologically and politically to the Europeans and Ericsson is determined to protect 'fortress Europe' the the greatest extent possible. As Maurice correctly pointed out, it is tempting to characterize ERICY as the devil incarnate, but such would be unfair and demeaning to the legions of talented people at the company. Ericsson's GSM franchise is powerful and valuable. Unfortunately for the company, it appears that it remained committed too long to the TDMA air interface, believing incorrectly that the GSM franchise was large enough, and technologically sufficient, to preclude CDMA's broad adoption. GSM's losses to CDMA in the America's and in key Asian countries such as Korea and Japan has forced the company to rethink its strategy, hence the promulgation of W-CDMA. If ERICY could have promulgated a competitive 3G standard that excluded QC's IPR, and for that matter the rest of the North American cdmaOne community, I guarantee you that we would be staring at the specifications right now. QC's current bargaining posture directly reflects the company's strong patent position. Think about it this way, if QC's patent position were weaker, say just good enough to ensure its participation in W-CDMA, then the company would be supporting virtually ANY CDMA-based standard promulgated by the Europeans. Under such circumstances, any migration from TDMA-based GSM to W-CDMA would afford QC a broader market opportunity than currently exists and, from this hypothetical weak position, QC would look to cross license its IPR with ERICY's to provide for its participation in W-CDMA. The reality is quite different. Qualcomm is saying that if the Europeans do not provide convergence with IS-95 (i.e. a straightforward migration path), then the company will not license its IPR...period. Unless you believe that Irwin and company are fundamentally stupid, and willing to risk a bonanza of incremental market potential on a flight of fantasy, one must conclude that Qualcomm's has four Aces in its hand. QC's blocking IPR position suggests that were the Europeans to go ahead with an unlicensed version of W-CDMA, at a minimum Qualcomm would be able to tie the standard up in patent litigation and probably involue the U.S. government in a trade battle. Either way, deployment of such an unlicensed form of W-CDMA would be delayed, subjected to years of patent litigation, and ultimately stillborn because network operators would not want to deal with the uncertainty. The European's would find themselves without a 3G strategy AFTER publicly disclosing that their migration path was toward direct sequence spread spectrum (CDMA). Under this scenario, cdmaOne would likely accelerate it marketshare gains and the Europeans could witness the balkanization of their whole carefully assembled wireless telecom franchise. I do not think so. The odds favor a compromise standard that will meet most, but not all of QC's objectives, and provide Ericsson with enough to claim victory. After which, worldwide wireless telecom will begin to converge around CDMA and Qualcomm will continue on as the single best investment in this technological convergence. Best regards, Gregg