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No. of Recommendations: 11
With apologies to those on this board who don't care, can't stand it or have already
made up their mind.

I have to say that the posts on this board have put me in a less bearish postion on
QCOM - like hjelmerus I'm doing the DD in earnest.

However the following posts on the NOK bard may be of interest

First off is the market share
(http://boards.fool.com/Message.asp?id=1190244001630000) bur reproduced here

Period Subs Growth % Note
GSM
01/00 303.5 12.0 growth numbers for 1 month
12/99 271.0 19.1 growth numbers for 2 months
10/99 227.5 15.1
07/99 197.6 16.2
04/99 170.0
CDMA
03/00 57.2 14.2
12/99 50.1 21.9
09/99 41.1 22.3
07/99 33.6 17.9
03/99 28.5

Secondly is a bunch of posts on SI by Tero Kuittinen referenced at
http://boards.fool.com/Message.asp?id=1190244001629000 . Of them all the posts
that I was most interested in was
http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=13849765 where Tero
states (with some plausibility) that GG techniques are in fact a problem in the
wireless world.

To develop the theme a bit further does the GG only apply in a purely competititve
world? I.e. if you do end up with 2 or more companies cooperating as well as
competing will this altered situation automatically ensure that a GG does not form
and that looking for one is pointless?

For example the basic IP standards we use to access this board today were created by
cooperation. The obvious protocols they were up against were DECnet, SNA, IPX and
Netbios. In the early 80s it would have been a brave man who said that IBM's SNA
was not destined to be the dominant data protocol in the world for ever - but,
because it was IBM proprietary, SNA equipment never got the push into new
directions that would ahve allowed it the ability to compete with TCP/IP. Likewise the
Ethernet vs Token-ring LAN protocol war and so on. Another example could be the
DVD system vs Videodisc or Compact Discs vs 8 track.

From my understanding of the book this would be mean that a royalty / king game
has formed which means that a Gorilla is unlikely to emerge.

Wandering slightly back on topic. What does this have to say about QCOM, if QCOM
is trying to be a gorilla in a market that is already (as agreed by many) a royalty one?
It is true that Cisco has managed to become a gorilla despite the fatc that Cisco
competed in an open standards arena but Cisco did manage to create some
proprietary extensions and gain early competitive advantage, but I still can't see how
QCOM can do this.

Why? because their raison d'etre is now to sell their IP at the highest price available.
If other companies have a competeing standard with lower cost IP that does the
same job and costs them less why would they buy the expensive one? This is rather
like how Welfleet LOST to Cisco: welfleet routers had far superior forwarding
capacity to cisco, but they cost more up front. In general the customer bought the
"cheaper" cisco router (and then got stuck in a world of continuous upgrades as his
network traffic doubled every 9 months - but I digress). At present I can see much
the same approach by Qualcomm - telling everyone that their CDMA is better and
thus worth the extra $$$ and so on without really getting down and finding out the
market need AND the price the punter is willing to pay to get better than adequate
performance.

DD
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No. of Recommendations: 7
DD,

I might be wrong, but I think the point you are missing is that Qualcomm is the Gorilla of CDMA. It's a proprietary, open architecture. The value chain is strong and getting stronger monthly. No question about it.

That's as opposed to the whole wireless market. There's also no question that CDMA has formidable competition for lots of reasons with GSM and to a lesser degree with TDMA. But it's not a winner-take-all scenario. Both camps can do tremendously well.

A second point you might be overlooking is that the growth you showed has only to do with voice. My hunch is that the data tornado will begin next year or the year after at the latest. I believe that will be hugely in Qualcomm's favor.

I believe the third point is that once the data tornado is well under way, a few years later we might see a tornado of 3G technology, where again Qualcomm will benefit hugely.

It's all my opinion. Nothing more.

Tero states (with some plausibility) that GG techniques are in fact a problem in the wireless world.

I'm pretty sure that as of a week ago Tero hadn't read the book. A friend of mine publicly offered it to him and in response Tero publicly acknowledged that he hadn't yet read it. I don't know if he took my friend up on the offer.

--Mike Buckley



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No. of Recommendations: 25
Wandering slightly back on topic. What does this have to say about QCOM, if QCOM
is trying to be a gorilla in a market that is already (as agreed by many) a royalty one?
------------------------------

I'm not sure you truly understand the wireless landscape. QCOM is by any measure a Gorilla, and depending on what neighborhood you live in they would be known as the "Mac Daddy" or "Daddy Mac", take your pick.

The current wireless infrastructure is all 2G and that marketplace is history, gameover, who-cares, etc. QCOM is the Intel (only bigger and badder) of 3G, that includes cdma2000, W-CDMA, whatever. 2.5G and then 3G technology will be happening in the US next year, sub 12 months. It will happen alot faster than most estimates. Keep in mind, many estimates you still read and hear about were formulated last year or early this year, however three events/issues have conspired to accelerate the deployment:
1) The unprecedented bids for the UK's 3G spectrum (50B-USD) this past March. Bankers and markets are getting nervous at the 3G total cost, thus the need to step up revenue projections for the new 3G services. Expect a 3G/bluetooth/128kbps phone to cost $100/mo. If you dont need DSL while your not home, then the carriers will be sure to remind you of this. CE concerns will also make most carriers reconsider most 2.5G technology as "not the best use of resources".
2) The takeup rate with Docomo in japan is melting even the super skeptics. Demand is so massive, they had to implement a limit to daily signups.
3) Some of the test/verification of 3G infrastructure is going better than expected. Rumor has it that Verizon and SprintPCS are seriously considering deploying 144kbps wireless broadband handsets. (1Q01)

I'm not really big on commericals, but some of the new Lucent ads are really on the point, ie. change the way people communicate and you change the way people live (behavoir patterns). Think of it this way, the light-bulb was the motivation for deploying electrical grids, but less that 5% of a house's wattage is devoted to lights, 95% is powering new/other devices. Consider the improvements of realvideo over modems these past few years (its has been very dramatic), now bump up the bandwidth on the lowest 3G/subscription package and viola you have compelling realtime videoconferencing.

Capital financing pressures on the carriers are being stepped up, fast 3G sub pickup will buy alot of credibility with bankers/markets, furthermore consider the herd effect, no carrier wants to be seen as late to the party. Actually the carriers BIGGEST concern is being commoditized and regulated as being just "portable pipes", they are furiously working on building their own "wireless portals", and/or partnerships. Personally I dont think the portal plans are going to work out, then again I'm not a carrier.

In the past "dual-mode" phones refered to analog and digital, expect multi-technology phones, GSM/cdma2000 phones, that sort of thing.

PS. RE:China, screw all the china noise, its just a bunch of PR flacks trying to earn their keep, its really just SOP. The chinese negotiate differently, so what, all they really want is the best deal possible. Their so-called 3G competitor T???-CDMA is a mere redherring, how do you spell "straw-man"?
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Charlieblack,

I agree wholeheartedly with all the back end of your post - from the It will happen alot faster than most estimates. onwards.

I have absolutely no doubt that 3G will show up a whole lot sooner than expected though there are some technical bobbles that have to be worked out - for example whether to us IP v4 vs IP v6 and how to connect either to the internet - but thats just technical details.

I think you are dead right on the carrier portal bit, in fact you are already seeing that with WAP and France Telecom's attempt to limit users to their own WAP gateway. And I 100% agree that the China TSD-CDMA or whatever its called this week is a redherring.

My potential problem is in the bit where you say QCOM is the gorilla of 3G. This bit has always been the bit that I can't get over because it seems to me that QCOM is betting the farm on being a monopoloy supplier of 3G IP and dominant supplier of chipsets. This concerns because of the previous data world examples (Token-ring vs Ethernet would be the most relevant) where a dominant IP holder essentially killed the market in one varient by maintaining excessively high prices while a competeing technology with no IP licensing problems was able to cost reduce technology to the poitn where there was no competition in price/performance.

If someone such as the scandinavian duo comes up with a defensible technique to replicate some of QCOM's CDMA IP without infringing or comes up with a better scheme that is compatible then QCOM then QCOM's IP becomes marginalized. Without the IP QCOM has a problem. In order for QCOM to win it has to convince the world that its IP is a) very good and b) that it is impossible or very expensive to develop an alternative. At present I am not convinced that QCOM has this IP thing nailed. But I welcome all input to the contrary.

DD
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From what I have seen so far in the discussion I have seen no one mention the word "partners" yet. In the CNBC Interview from last Friday, Nokia CEO Jorma Ollila, stated that he wants to have a CDMA market share at par with the market share that he has in the other standards that Nokia uses now. That according to my understanding equates to a 27-30% market share within 18 months . The question is how will this be done without the help of Qualcomm. Since QCOM has exited the Handset Business they are no longer competitors but are now partners. CDMA will play a large role in 3G so QCOM will be along with its partner Nokia a great team going forward. The only difference I see is that I would equate QCOM to an Intel type company now and not a Nokia type company. Qualcomm is also a 300 pound Gorilla while Nokia is a 900 pound Gorilla. Thats the only difference I see.

Fool On, "Learning Together"

MYCROFT
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DD,

<i.If someone such as the scandinavian duo comes up with a defensible technique to replicate some of QCOM's CDMA IP without infringing or comes up with a better scheme that is compatible then QCOM then QCOM's IP becomes marginalized.

You're exactly right. That's the issue to keep a close eye on in the coming years. As for the probability of being able to do that, all of the behemoths with a lot more resources haven't done it yet.

To be clear, Qualcomm is not yet the Gorilla of 3G. There is no 3G marketable product as of yet. Hence, no gorilla.

--Mike Buckley
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This bit has always been the bit that I can't get over because it seems to me that QCOM is betting the farm on being a monopoloy supplier of 3G IP and dominant supplier of chipsets. This concerns because of the previous data world examples (Token-ring vs Ethernet would be the most relevant) where a dominant IP holder essentially killed the market in one varient by maintaining excessively high prices while a competeing technology with no IP licensing problems was able to cost reduce technology to the poitn where there was no competition in price/performance.

DD, I am not familiar with the details of the ethernet example, but I seriously doubt CDMA will be choked off by "monopolistic" high prices even if CDMA becomes the predominant standard, in its various flavors, of the entire world. First, the cost of the IP itself is modest in relation to the cost of providing CDMA wireless service. This modest royalty is the only component of the CDMA value proposition that constitutes a monopoly and that is under QCOM control. The key is that CDMA provides economies, through efficient use of spectrum, that go well beyond the modest licensing and royalty fee. Sure, any technology can get disrupted, but I seriously doubt that CDMA will be displaced solely because of the cost of the IP. QCOM does not have the power to keep overall CDMA service prices so high as to make the service unattractive.

Second, competition among CDMA handset manufacturers and among service providers will be as fierce as it is today, and the competition will keep CDMA prices reasonable. And while QCOM will be collecting their royalty, they will continue to contribute to the CDMA value proposition through ASICs having attractive price-performance characteristics.

Others have been trying for years to develop alternatives to CDMA for the 3G world. I think time has run out for the next generation.

I am not trying to trivialize the risk of disruption to CDMA technology. I'm just saying that QCOM only has monopolistic power on the cost of the IP, and that this cost is small compared to the overall cost of CDMA service. Competition will continue to be fierce among all CDMA participants. A disruption to CDMA, if and when it happens, will not occur because the CDMA service based on QCOM IP is offered at such a high price as to encourage others to get out from under it.

--fox



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. At present I am not convinced that QCOM has this IP thing nailed. But I welcome all input to the contrary.

QCOM is convinced. If you are not, I suggest you invest elsewhere.

Terry
... long QCOM ...
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<<QCOM is convinced. If you are not, I suggest you invest elsewhere.>>

Nope. No boosterism here. No sir.

Some interesting and important questions have been raised. Why discourage them?
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<<QCOM is convinced. If you are not, I suggest you invest elsewhere.>>

Nope. No boosterism here. No sir.

Some interesting and important questions have been raised. Why discourage them?


I must apologize, to DirtyDingus and to the board. As I posted that, I thought (really) that I was on the QCOM board.

Terry
... is long on QCOM, but shouldn't rave about it here ...
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<<I must apologize, to DirtyDingus and to the board. As I posted that, I thought (really) that I was on the QCOM board.>>

God knows I don't want to start anything, and I ask this with the utmost humility, but why should it make any difference? The question posed is hardly of the Yahoo QCOM sucks I shorted it at 180 yur all idiots type. Isn't there even the scintilla of a possibility that the market may be right?
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No. of Recommendations: 10
. At present I am not convinced that QCOM has this IP thing nailed. But I welcome all input to the contrary.

QCOM is convinced. If you are not, I suggest you invest elsewhere.
-------------------------------
Let me add a big hearty DITTO to that. But since this is TMF let me sprinkle some numbers for the DD crowd. QCOM has roughtly 150 CDMA patents with close to 500 pending, and then more on the horizon. Anything that is remotely related to their CDMA technology is "covered and smoothered". (credit to Waffle House).

Furthermore let me offer some insights into contracts that may not be "intuitively obvious", terms of the license agreements include stipulations and detailed understandings as to what is QCOM technology (and any and all QCOM related/derivative technologies), thus nobody is going to get a FREE ride. Another side benefit is the incrediably rich and detailed market data QCOM collects as the foundation for royalty collection. Many people are unaware of the incrediable intangible benefits Microsoft reaped in this regard with it OEM OS deals. Lets just say that this benefit was so powerful that it was the basis for the devious "per-cpu" licensing stipulations they just got busted for. Additionally IMHO the fees QCOM is commanding and getting are very reasonable, if anything toooooooooo reasonable.

Early in this thread I made a analogy with the development of the power grid, please consider that QCOM has additional services ready to be licensed and deployed on top of standard cdma voice/data services.

Also someone earlied stated that QCOM might be a mere 300lbs Gorilla, but Nokia will be a 900lbs Gorilla. I totally disagree, perhaps it may be QCOM 900lbs and Nokia 100lbs. One test for the weight of a Gorilla (someone should trademark this: "The Gorilla Scale", cobrand'em with Etrade and flood Targets with'em for the XMas season, and when you step on the scale it should say "Whose the Mac-Daddy"?) ok back to the topic, is how easily a competitor can marginalize and penetrate your marketspace. Consider this set of circumstances: Portable Wireless Broadband data servies will be a slam-dunk, but consumers might reject what we now call the handset as the client device. Next week we should see the introduction of new wireless Webpads, and web-pdas. If this happens QCOM still wins and wins big, and the handset guys begin a painful scramble for relevance.

When a technology starts to becomes a cultural phenomena and then when its adoption becomes a cultural expectation the rules of the marketplace change dramatically. This is the risk that Nokia faces. QCOM is the arms dealer for all portable wireless broadband (bar-none, really folks its game-over, there are no competitors and more importantly there won't be any) QCOM doesn't face the consumer's "choice of client" risk, in fact it reaps additional monies because its selling IP and chips, etc. to everybody; phones, pads, pdas, cars, motorcycles, bicycles, whatever. Some mfgs will lose out, but their devices will still be full of QCOM technology.

I'm a true believer, I've drunk the kool-aid, as they say, the wireless space (and the optical) is on the cusp of a trillion dollar explosion. So buckle your seatbelts and hangon baby.

I say let the wealth creation begin.
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God knows I don't want to start anything, and I ask this with the utmost humility, but why should it make any difference? The question posed is hardly of the Yahoo QCOM sucks I shorted it at 180 yur all idiots type. Isn't there even the scintilla of a possibility that the market may be right?

Hi, db

I don't want to 'start anything' either, but your question(s) deserve a response.

The original post to which I responded read, in part:

...
If someone such as the scandinavian duo comes up with a defensible technique to replicate some of QCOM's CDMA IP without infringing or comes up with a better scheme that is compatible then QCOM then QCOM's IP becomes marginalized. Without the IP QCOM has a problem. In order for QCOM to win it has to convince the world that its IP is a) very good and b) that it is impossible or very expensive to develop an alternative. At present I am not convinced that QCOM has this IP thing nailed. But I welcome all input to the contrary.


Now, what I was trying to get at, admittedly in shorthand, is that no one can 'know' that QCOM's claim to CDMA IP will always stand up, and will never be circumvented. No one can 'know' that CDMA will be the premiere technology for implementation of 3G networks; no one can 'know' when 4G networks will be introduced; etc. There is an awful lot that no one can 'know'.

But, we do have QCOM's opinions on the first three points (IP rights, circumvention, 3G technology). And, as far as I have been able to determine, there is no other opinion that I should value more. If that's not good enough for an investor, then he or she should invest elsewhere in my opinion.

I'm done with this subject now on this board. If you want to discuss it further, please email me.

Terry
... apologizes once more ...
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CharlieBlack wrote: Let me add a big hearty DITTO to that. But since this is TMF let me sprinkle some numbers for the DD crowd. QCOM has roughtly 150 CDMA patents with close to 500 pending, and then more on the horizon. Anything that is remotely related to their CDMA technology is "covered and smoothered". (credit to Waffle House).

I did a patent search with Qualcomm as assignee and CDMA in all fields. The search yielded 248 entries:

http://164.195.100.11/netacgi/nph-Parser?Sect1=PTO2&Sect2=HITOFF&p=1&u=%2Fnetahtml%2Fsearch-bool.html&r=0&f=S&l=50&TERM1=Qualcomm&FIELD1=ASNM&co1=AND&TERM2=CDMA&FIELD2=&d=pall

I did a similar search on Ericsson and CDMA, and the search yielded 250 matching documents. Nokia also has more than 150 patent documents referencing CDMA, DS-CDMA and WCDMA, including one on WCDMA power control.

I don't think I can agree with the statement "anything that is remotely related to their CDMA technology is 'covered and smothered'," although I can agree with you more if you say Qualcomm owns the core patents for CDMA.

However, to me the net royalties Qualcomm will receive as part of 3G sales is unknown. Qualcomm will be making WCDMA and GSM dualmode chipsets, and by doing so, it will have to pay the other patent holders.

As many contend, 3G is still several years into the future. I don't quite consider 1xrtt as 3G simply because it is included in the IMT-MC specs (heck, GPRS is also part of the IMT-DS specs). GPRS, HSCSD, EDGE, WAP and Bluetooth are where the money is in the near future.

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BTW, Tero mentioned on the SI NOK board that Ericsson and Nokia maintained the net royalty fees they pay are about the same as the royalty fees they receive for 3G.

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That little flurry was a shocker. But it was handled in a nice fashion. Thanks. I'm not sure I could stand this board to go nuts too.

Binturong
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Charlieblack,

Consider this set of circumstances: Portable Wireless Broadband data servies will be a slam-dunk, but consumers might reject what we now call the handset as the client device. Next week we should see the introduction of new wireless Webpads, and web-pdas. If this happens QCOM still wins and wins big, and the handset guys begin a painful scramble for relevance.

Perhaps you should check out http://www.symbian.com. This is one company that keeps Bill Gates up all night, and it is owned by the "handset guys."


When a technology starts to becomes a cultural phenomena and then when its adoption becomes a cultural expectation the rules of the marketplace change dramatically. This is the risk that Nokia faces.

Where did that come from? Could you please substantiate those statements? Yahoo posts don't count!

As far as I am aware of, many components that make up Nokia phones are made by American companies. Take your pick: Texas Instruments, RF Microdevices, TriQuint Semiconductor, Cree Research, Phone.com.

One thing I understand about Nokia is that it embraces open platforms and open technologies. Think Bluetooth, SyncML, WAP, Symbian and so on. Yes, that's a significant departure from the Gorilla-game paradigm (Royalty game), but heck, Nokia rakes in billions and billions hand over fist every year.

Nokia is about building the Mobile Information Society, although right now handset sales constitute a large portion of the total revenue. Furthermore:

Nokia's history has shown that the right decisions made at the right time breed success. We are confident that this vision and the courage to create new opportunities will help us achieve our targets as we move into a new era in communications.

http://www.nokia.com/inbrief/history/

I think this is key. Nokia will launch CDMA products when the time is right.

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tichiam,

I did a similar search on Ericsson and CDMA, and the search yielded 250 matching documents. Nokia also has more than 150 patent documents referencing CDMA, DS-CDMA and WCDMA, including one on WCDMA power control.

True, but a search on marketable CDMA-based products those companies are selling that don't involve paying a royalty to Qualcomm or buying ASICs from a Qualcomm-licensed fab will yield completely different results. I don't think you'll find any. That's because Qualcomm is the only company that has been able to get CDMA-based products to work on a commercially marketable, tested basis. There's no guarantee that won't change, but would you not make an investment in Cisco simply because other companies have patents on routers, switches, etc.?

--Mike Buckley
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tlchiam,

Its a mistake to base market intrepretations merely on the number of patents. Many of the patents you attribute to the nokia are dependent patents, they only serve to reinforce the power of 3G/CDMA technology. Ericsson and Qualcomm have a very close relationship, since ERICY bought Qualcomm's infrastructure business. But don't take my word for the power of QCOM's position, take as evidence the attempted end run by Nokia and Motorola earlier this year, for the 5Mb data stuff. The result was they capitulated to QCOM, rather than face a fight. Now that my friend is called precedent.

Qualcomm will be making WCDMA and GSM dualmode chipsets, and by doing so, it will have to pay the other patent holders

This is not a sign of weakness, which is how I intrepreted your post, but merely a very pragmatic/aggressive and logical step. Transitioning for 2G to 3G is a massive upgrade (literally a trillion dollar upgrade). Windows 98/NT/2000 can all still run DOS apps, this is same sort of thing. Accelerating 3G/CDMA technology is the name of this game.

Net/Net the flow of monies is a one-way street to Qualcomm. How do you spell cul de sac? Or the 3G roach(royalty) motel?

As many contend, 3G is still several years into the future
Well my contention is very different, as per an earlier post in this thread. Its very possible that GPRS and EDGE will just be skipped, and carriers will go for the gold, 3G. I'm in Atlanta, and BLS is the dominant carrier, and they are making great progress in their ERICSSON/3G capable infrastructure rollout. Please consider the infrastructure and marketing leadtimes. No carrier really wants to get stuck in the middle with stop-gap/deadend technology. Furthermore the prospect of having to turnup the marketing machine twice and then induce what many subs will consider as unnecessary handset churn is not very appealing. Carriers have billions at stake.

3G will be happening in the US (albeit not NATIONWIDE) in 2001.
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Charlieblack,

Consider this set of circumstances: Portable Wireless Broadband data servies will be a slam-dunk, but consumers might reject what we now call the handset as the client device. Next week we should see the introduction of new wireless Webpads, and web-pdas. If this happens QCOM still wins and wins big, and the handset guys begin a painful scramble for relevance.

Perhaps you should check out http://www.symbian.com. This is one company that keeps Bill Gates up all night, and it is owned by the "handset guys."
-------------------------------------------------------
Yes I know about symbian, so what. They're just too small to be relevant. Samsung is the company that keeps Ericsson and Nokia up at night. AOL/Transmeta/Gateway are going to keep alot of people up at night. Palm, Mobile Linux, PicoBSD, yes its more than possible that we'll see a platform explosion.


Me:When a technology starts to becomes a cultural phenomena and then when its adoption becomes a cultural expectation the rules of the marketplace change dramatically. This is the risk that Nokia faces.

tlchiam:Where did that come from? Could you please substantiate those statements? Yahoo posts don't count!


I don't post on Yahoo, and I take it you didn't complement me. Nevertheless, I'm confused as to what your question/point is. This whole thread has been a determination/comparision of QCOM and Nokia as Gorillas. Estimates call for 1.4Billion handsets and at least 700m Bluetooth devices by 2004. (they wont all appear 1/1/04, the tsunami starts this X-Mas season). My point in this thread has been that QCOM wins because 3G/CDMA technology will be in those 1.4B devices, and Nokia very well may not. Prospects of 1 Billion devices is attracting alot of players. Consumers may decide the cellphone is not a good data client and choose other formfactor data only devices. If this happens its not good news for Nokia, and that is what I consider a material risk.

Consider historical adoption trends; radios, wiredphones, tvs, cars. At first you only had one, then two and now as many as you want. Most families, even those below poverty, have more than one car, tv, radio. I expect the same thing will happen towards the end of this decade. Subs will have a carrier account accessible by MANY devices. Most people will have 3 or more wireless data broadband devices. Heck I have 5 PCs in my home office right now. People who simply extrapolate Nokia's current market % on to 1+ Billion devices are in for a very rude awakening.

As per Nokia's history, you know of course that earlier this decade they almost went bankrupt. Superior handsets saved their ass. Their current advantage in handsets doesn't offer/represent high BOE or high SC. Two of the main ingredients for gorillas. Design and fashion are not stable sustainable foundations.
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Charlieblack,

Samsung is the company that keeps Ericsson and Nokia up at night. AOL/Transmeta/Gateway are going to keep alot of people up at night. Palm, Mobile Linux, PicoBSD, yes its more than possible that we'll see a platform explosion.

Samsung's handset marketshare is insignificant compared to the Big Three to begin with. It will be even more interesting to see how Samsung will perform once the Korean government removes handset subsidies.

Palm? Let's see: since Palm introduced the first PDA in 1996 until March 2000, it has sold some 6 million units, or an average of 1.5 million units a year. Nokia sold 78.5 million handsets in 1999 alone -- that's 1.5 million units a week.

Symbian has the support of the major handset makers: Ericsson has a 21% stake in Symbian, Nokia owns another 21%, Motorola yet another 21% and Mitsubishi 9%. What will happen to Palm when Nokia, Ericsson, Motorola and Mitsubishi start rolling-out EPOC/Quartz-powered phones?


I don't post on Yahoo, and I take it you didn't complement me. Nevertheless, I'm confused as to what your question/point is.

I apologize for my original statement -- it seems like you genuinely do not understand Nokia's business model. I suggest you visit the Nokia board and read the FAQ and the recent posts, to clear up the misconceptions.


Consider historical adoption trends; radios, wiredphones, tvs, cars. At first you only had one, then two and now as many as you want. Most families, even those below poverty, have more than one car, tv, radio. I expect the same thing will happen towards the end of this decade. Subs will have a carrier account accessible by MANY devices. Most people will have 3 or more wireless data broadband devices. Heck I have 5 PCs in my home office right now.

That's the whole point! Nokia is "paving the way to the Mobile Information Society," delivering products like wireless DSL internet gateway and various kinds of multimedia terminals.


As per Nokia's history, you know of course that earlier this decade they almost went bankrupt. Superior handsets saved their ass. Their current advantage in handsets doesn't offer/represent high BOE or high SC. Two of the main ingredients for gorillas. Design and fashion are not stable sustainable foundations.

Bankrupt? I don't think so. Nokia used to make paper and rubber boots, sure, but that's not today's Nokia. The market reality is that strong value chains have formed around Nokia: it has incredible economies of scale in manufacturing and it enjoys the strongest purchasing power in the wireless industry. Some compared Nokia to Dell -- but I don't think that's a good comparison. As the 11th most valuable brand in the world, Nokia has successfully built a widening moat around its business model.

Switching costs: Nokia base stations and site solutions contain slots for HSCSD, GPRS, EDGE and WCDMA. Once an operator implements a Nokia network, its upgrade path to 3G is locked-in, unless you believe that HSCSD, GPRS, EDGE and WCDMA are all vaporware. Nokia is now neck-to-neck with Ericsson in the GPRS infrastructure market.

http://www.nokia.com/networks/mobile/bss/index.html
http://www.nokia.com/networks/mobile/bss/gateway.html


This whole thread has been a determination/comparision of QCOM and Nokia as Gorillas.

Nokia and Qualcomm are very different animals competing in different markets (although there are overlaps). Nokia is the undisputed King in the handset market, while Qualcomm is the Gorilla in cdmaOne (it may or may not be in 3G). But since time immemorial, humans have always triumph over beasts! ;-)

Breaking news: Nokia and China Unicom bring WAP to mobile networks in China
http://press.nokia.com/PM/783586.html

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DD,

<< a bunch of posts on SI by Tero Kuittinen ... the posts that I was most interested in was http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=13849765 where Tero states (with some plausibility) that GG techniques are in fact a problem in the wireless world >>

Tero is a respected and astute poster on wireless, an avid promoter of Nokia, and a long time of Qualcomm, who long insisted that CDMA would never work.

Some background on the post you reference is that several months prior, Tero, wandered onto the SI Gorilla board attempting to make the case that Nokia was a gorilla in the broad arena of wireless. This is difficult to do since Nokia does not control a proprietary architecture which is a fundamental of the Gorilla Game. SI Gorilla Gamers reminded Tero that QCOM was defined as a gorilla in the narrower category of CDMA which today comprises 15% of the total wireless market, but is the fastest growing technology within the larger wireless arena.

Tero was also asked to read The Gorilla Game. He replied that he had. As is obvious from his post, he does not buy the fact that control of a proprietary architecture increases the competitive advantage of a company in the category in which they are a market leader.

An SI Gorilla Gamer responded to a Tero post, pooh poohing the idea of the gorilla advantage, leading to the Tero post you link.

Did you read that original post (by a gorilla cultist as Tero would refer to a GG advocate) and review the slides linked in it?

http://www.siliconinvestor.com/stocktalk/msg.gsp?msgid=13843128

Although in his post you link Tero sites some impressive facts about GSM & GPRS (technologies that are based on open committee based architecture), CDMA remains a faster growing technology than GSM, and CDMA remains in a period of hypergrowth. But this is not the real point of my post. The point is that Nokia (fine company that it is) lacks the proprietary control of any technology within the broad industry that is wireless, while Qualcomm has complete architectural control of the rapidly growing wireless technology segment that is CDMA.

- IC -
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<< a bunch of posts on SI by Tero Kuittinen ...>>
Tero is a respected and astute poster on wireless, an avid promoter of Nokia, and a long time of Qualcomm, who long insisted that CDMA would never work.


He also appears to be Finnish. Does he work for Nokia?

VoiVuori

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He also appears to be Finnish. Does he work for Nokia?

http://www.debry.com/tero_kuittinen.htm

says hes a neurobiologist. Though i thought he was an analyst...

DD
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Hi. I really, really hate to bring this up again but I'm about half way through the book and still trying to understand this stuff. As I'm reading the book, I continously think about wireless and the companies representing wireless because it is alive and happening now. Sorry if I'm way off here and waiting your time.

My understanding is that you first look at the technology to see where is stands in the Technology Adoption Life Cycle. It seems to me that wireless technology is at the same place as network technology was in the early '90s - lots of players, lots of products, lots of ideas as how networking should work ( inter-operational, end-to-end, compatible, etc).

Next it is my understanding that you look at the companies that are representative of that technology and invest in the leading tech companies. (So you should invest in both NOK and QCOM and others). Then as the technology unfolds you remove the failing companies and end up with a Gorilla.

So, I don't see either one of these companies currently being a Gorilla. And I really don't have a clear picture if the wireless technology is going to end up as networking did with a clear Gorilla (Cisco) or as the PC did with no Gorillas.

Do I have this right or should I go back to page 1 and start over?

Thanks for your time,
TarHeelsFool
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TarHeel,

I think you've basically got it right, but you need to break down the wireless industry into its various sectors. When you do that, you'll probably see that CDMA is a proprietary, discontinuous innovation with an open architecture. Of the players in the CDMA space, Qualcomm is the gorilla.

Most of the wireless space is really a royalty game, not a gorilla game. CDMA is a glaring exception, being a gorilla game.

--Mike Buckley
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I have just established a wireless basket with QCOM, ERICY and NOK. I think by investing in a basket, it doesn't matter that much if wireless communication turns out to be a gorilla game or just a royalty game. I think even if I (only) invest in one or two kings, the whole basket should offer decent returns.

I am thinking about adding more stocks to my basket, maybe MOT ? I would appreciate any suggestions!

AF

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