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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: scott who wrote (946)	4/2/1999 11:23:00 PM
From: KY	Read Replies (1) \| Respond to of 54805

Scott, Spent some time reading Greg's posts...quite a battle over there. I've finally found a "Wireless/CDMA for dummies" article on Raging Bull. Much clearer now what this all means. Note how in the fourth paragraph the author says Qualcomm "emerged with a better way." Not sure if it has been posted here before: NEW BUYS/SELLS The biggest piece of technology news last week, was also one of the least noticed. On Friday, Qualcomm (QCOM) announced that it had settled a patent dispute with Ericsson (ERICY) that will clear the way for a global wireless standard based on Qualcomm's Code-Division Multiple Access (CDMA) technology. Ericsson will also buy Qualcomm's money-losing terrestrial wireless business in a deal worth around $1 billion. Ericsson's surrender marks the culmination of Qualcomm's rise to the forefront of the wireless industry. The company has been the leader in developing, promoting and marketing CDMA, and has locked up much of the engineering talent, design skills, and proprietary rights surrounding this technology. For the past decade, the wireless industry has been locked in a battle over two competing, incompatible, digital technology standards that specify how the bandwidth spectrum is allocated during a cellular call. One method is called Time-Division Multiple Access (TDMA), the other is CDMA. In 1989, TDMA was selected as a digital cellular standard, and established a market base in Europe using TDMA-based GSM (Global System for Mobile Communications). TDMA breaks up the spectrum into time and frequency slots and cannot readily offer bandwidth on demand or switch unused time and frequency spots to other users on the network. TDMA increased the simultaneous user based by as much as six or eight-fold. But the story doesn't end there. A West coast company called Qualcomm, who had been in the business of supplying the military with spread spectrum technologies used in things like spy satellites, emerged with a better way. While TDMA attempts to fit numerous calls into the same frequency channel, CDMA assigns each call a unique identifier code that allows the base station to recognize whether it's voice or data and process it correctly. It also allows calls to utilize the entire frequency spectrum because of the unique identifier codes. CDMA is more efficient and allows greater capacity gains. Interestingly, the creators of CDMA were also smart enough to add TCP-IP to the CDMA architecture. TCP-IP is the standard protocol of the Internet. This feature will soon allow Qualcomm phones to connect to the Internet from a laptop without a modem. Qualcomm has a multi-tiered strategy. The company has licensed its patented technology to more than 60 manufacturers to date, who use Qualcomm's intellectual property to manufacture handsets, infrastructure and other digital wireless products. In return, Qualcomm receives royalties for the use of its technology. The company also makes its own phones, chips, and wireless infrastructure products. It also owns a stake in the Globalstar Satellite Communications System. CDMA is the heir apparent to the global digital standard for wireless communications, and Qualcomm owns most of the technology's patents, engineering talent, and other intellectual property. Dataquest expects the number of worldwide CDMA subscribers to increase five-fold over the next four years. Qualcomm is already riding a tidal wave. Since 1997, the company has increased revenues 60% to nearly $3.5 billion last year. But this is just the beginning. As cellular phones displace PCs by becoming digital communicators, Qualcomm makes money by licensing the standard, and then making the chips, phones, infrastructure, and other products on top of it. The next Intel (INTC)? We will buy 150 shares of QCOM on Monday morning at 10:15 AM. The stock closed Friday at $111 1/2.