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

To: Gregg Powers who wrote (11184)	6/5/1998 3:03:00 PM
From: rhet0ric	Read Replies (3) \| Respond to of 152472

QC would be better off collecting royalties from a non-backward compatible version of W-CDMA then it would be if it simply gave away its IPR. Well, there are trade-offs. Assuming that this is really the issue, and that a paradise scenario isn't possible (in which Qualcomm charges a significant royalty and W-CDMA is IS-95 backwards compatible), we're talking about two scenarios. In scenario one, Qualcomm sticks to its royalty fee, and W-CDMA is non-compatible; in scenario two, Qualcomm doesn't charge a royalty, or charges a negligible one, and W-CDMA is IS-95 compatible. Question is, which scenario is better for Qualcomm? In either scenario, Qualcomm gets to build and sell G3 W-CDMA equipment, so that's even. In scenario one, Qualcomm gets a royalty fee. However, IS-95 becomes an orphaned technology in places where W-CDMA is accepted. And companies that missed the CDMA boat have a chance to catch up. In scenario two, Qualcomm doesn't get a royalty, but IS-95 becomes a precursor technology. This means Qualcomm and CDMA companies can start building and selling CDMA everywhere, including Europe, immediately. And they are at a competitive advantage against companies who are behind on CDMA. Assuming that the paradise scenario doesn't happen, which of the two above is preferable? To know the answer, we would have to compare the numbers: which would Qualcomm make more money from, royalties or higher equipment sales? (In case you're wondering, I have even less financial clue than I have technical clue, so if you or someone could take a stab at that, I'd be highly appreciative). rhet0ric