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

To: DaveMG who wrote (28171)	4/24/1999 11:32:00 AM
From: DaveMG	Read Replies (1) \| Respond to of 152472

So Business Week runs a whole BIG piece on wireless with a special section on 3G and not even an honorable mention for Q. NTT lauded for its early move to WCDMA, hoped for transferal of power from Europeans to Japanese in the process etc..Lots of new smartphones, the pdQ is not alone.. Of course for those in the know a lot of this story deservedly belongs to QCOM. Sprint however does get a lot of attention without any mention of CDMAone. Makes me think however that the CDMA2000/WCDMA story really hasn't changed a wit except that QCOM no longer threatens to hold the whole thing up. NTT and the Europeans really have a lot of prestige at stake. WCDMA is "theirs" as opposed to CDMA2000 which is "ours". Although it seems wasteful to mandate a new standard with a different chip rate and all the other stuff, I'd be very surprised if that's not how things turn out. The WCDMA team probably sees little advantage in compromise now. VOD/ATI and all those Japanese CDMAone licensees seem to be our best hope. IMO it was the right thing for QCOM to step out of the vortex of the fray. That's easy to say of course after the mkt cap has quadrupled, but I've said for a long time that I didn't understand why Q should be hung out to dry for convergence when Q IPR sits at the center of all the CDMA proposals anyway. Our royalties are now thankfully guaranteed, removing what for many was obviously an important uncertainty. The question remains however as to how the fragmentation caused by multiple modes will affect QCOM. Gregg is on the record stating that he thinks this'll turn out to be a boon for equipment manufacturers, preserving fiefdoms and adding complexity, but will it also be a boon for QCOM? Because Q already sits at the center it stands to reason that Q in fact stands to be hurt by this fragmentation. Multiple modes require greater investments in R&D for example. Take a look at the Nokia earnings report. Look at all the free cash they're generating. How can greater R&D requirements be to our advantage when with convergence it would have been unnecessary? Will it really be possible for Q to fund the development of state of the art WCDMA BSC and MSM chipsets? And what about GSM/WCDMA chipsets etc? QCOM at this point controls the majority of the basestation controller chipset mkt. BTAB claimed Q had 70% of the mkt, others claim Q share is closer to 100%. I've been unable to determine so far what the real number is, whether for example Lucent and Motorola are making their own or not. In any case, one has to assume that this pervasive mktshare is of considerable advantage when it comes to designing MSM's with high call completion ,low dropped call rates, etc. In addition, the fact that the whole system runs on one companies chipsets probably makes the carriers job somewhat easier. VMan posted a link last week that showed Nokia was having trouble certifying a phone in Australia due to some incompatibility. I have no how idea how important this advantage really is, but it's something to think about. Some other thoughts… Q stated they'd only shipped 1 million of the MSM3000's so the jump in ASIC sales is not due to the “arrival” of the new chip. Nokia is making a smart move IMO by introducing this tri mode 800/1900mhz CDMA/AMPS phone. I seem to remember that Samsung is doing the same . Any confirmation on that? Nokia stated in its report that 40% of the phones sold are upgrades, not new subs. This number is down from 50% last year if memory serves. Makes me wonder if we're not headed down the same road as PCs? The phones get more and more powerful, lighter, longer battery life, at some point no too far away the necessity to upgrade diminishes. Fewer and fewer “high end” phones are sold because they're all in reality high end. We're fortunate in that sense. G* will be Q's high end phone success story. 3G is obviously supposed to provide a shot in the arm but I'm glad it's NTT shareholders who'll pay for the first experiment and not me.. Long rant I know ….DMG