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To: RMiethe who wrote (4831)	5/21/1999 2:57:00 PM
From: Rocket Scientist	Read Replies (2) \| Respond to of 29987

I suggest we're ingnoring or underestimating several factors in the preceding myriad of posts on how many handsets should be ordered and how fast: 1. Lead time for the handsets 2. Risk of obsolesence 3. Opportunity to optimize design based on market experience 4. Customer support/training requirements From the time value of money point of view, all us s/h would love to see instant deployment of 7M handsets, fully loading the system at an optimized price per minute. In an imperfect world, a compromise had to be made that recognized a normal ramp up time for a new product and allow for tinkering of phone designs, pricing plans and etc, while still providing timely cash flow. I don't think it's an accident that the number of handsets G* initially ordered is essentially the number it needs in use to reach cash breakeven. I think it recognizes that there aren't enough marketing people in the world to sell all those handsets instantly...it will take time to teach the initial customers (and to learn from them what features are most attractive and what doesn't work quite right). The handset designs that are eventually sold in millions will probably differ from what's available now in ways that are hard to foresee. It looks to me like the initial order of 300K user terminals won't be finished until 3/00. Ericson, at least, has a three month lead time from start of production to product delivery. So, I expect after one or two months of marketing experience, that is, say 12/99, phone orders from the retailers will come forward. Without wanting to sound like a cheerleader for mgmt, I think they are doing this rollout in a reasonable, measured way. The unsold minutes in the early months are a foregone profit, it's true, but count less than the money spent on UTs that might not be what customers want, or are found to have problems.

To: RMiethe who wrote (4831)	5/21/1999 5:42:00 PM
From: Maurice Winn	Read Replies (1) \| Respond to of 29987

RMiethe, don't be deceived by average cellular prices. Europe's average is about 42c per minute. I pay $1 per minute peak and 50c off peak. Others [our very own Oliver Schonrock on this thread] on the same Vodafone GSM system pay about 10c per minute [due to volume purchases and negotiated deals]. ClearNet has just announced their ThinPhone plan with maximum 15c per minute [20c Canadian]. There are heaps of plans in the USA, such as Sprint at 10c per minute anywhere to anywhere. Prices in places like China or South American where there is poor terrestrial service and extorquerationate governments running systems are generally higher. Prices are falling fast because the cost of providing service using cdmaOne is very, very low. The customers which AirTouch say they want are those who use a LOT of minutes and enjoy cheap rates. Incidentally, AirTouch is a high-priced service in my experience. Maybe their hayday is over and they'll become an also ran in telephony. A bit like L M Ericsson thought they were King Ericy with a beautiful cloak of silver and gold. Sure, the bugs in the handsets might not be totally worked out. Businesses still order things before bugs are all gone because planning must include knowing how many to make BEFORE the bugs are worked out because the production lines need to be built while the bugs are being worked out. This is parallel processing, not a series of processes. It all has to hit the deck running when they throw the switch. Handset orders can be conditional on handset performance, just as cdmaOne networks are bought with performance guarantees. So there is no need to delay ordering. The handset performance can be tested right now because there are heaps of satellites up there and the handsets work perfectly. There is no need to 'wait and see'. There are billions of $$$ AirTouch is going to miss out on because of 'wait and see'. Are they in business or not? If they are waiting to see whether the system has total integrity before ordering, they will wait forever because total integrity will only be proven when the system is fully loaded. There is a grey area between 'no customers, sell the stock' and 'waiting to see that the system is fine and the business plan will play out, keep the stock'. There is 'bumbling along, passing up a great opportunity, letting the competitors in, slack marketing, poor execution, overpriced minutes, underpriced handsets, unsatisfied potential customers, but enough will go out the door to justify the current stock price'. Don't forget, the stock price in 10 years will be about $800, [instead of $2000 if they did it right] so it is still worth holding. Poor quality management says, "Well, $800 is pretty good, so who cares about the missing $1200?" Good quality management gets the best out of the system. Selling at $20 isn't such a good idea. Maurice

To: RMiethe who wrote (4831)	5/23/1999 9:09:00 AM
From: mauser96	Read Replies (1) \| Respond to of 29987

This is a brand new product, and partners and telco companies are taking real risks no matter what they do. If they order too many handsets, they will wind up eating them. If they order too few, they won't be able to meet the demand. The Iridium debacle must have a psychological impact at the very minimum. They don't know whether it's because of flaws in Iridium, or whether maybe nobody wants satellite phones. Companies don't like risk, especially telecos accustomed to operating in an almost risk free world. Since they don't feel that they understand the risk level , they will be conservative and err on the side of ordering too few. From their standpoint it's probably better to be in the line to get more devices than taking write-offs for equipment that may be defective or has no market. The eventual size of a disruptive technology can't be predicted in advance. The usual polling methods don't work.