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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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