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Qualcomm´s Multi-lemma 1) Introduction to the highly systemic wireless industry 2) Challenges that Qualcomm faces Within the Cellular industry Qualcomm faces the challenge of a new standard - WCDMA.

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qualcomm s multi lemma
Qualcomm´s Multi-lemma
  • 1) Introduction to the highly systemic wireless industry
  • 2) Challenges that Qualcomm faces
    • Within the Cellular industry Qualcomm faces the challenge of a new standard - WCDMA.
    • Within the larger Wireless Industry Qualcomm faces the challenge of another new standard – WI-FI (802.11)
  • 3) Wireless data opportunities
cellular system components overview
Cellular System Components Overview

Mobile Phone

Air Interface & Frequency

Antenna &

Base Station

T1, T3 lines

Backend Equipment –

Switching, Billing etc.

cellular technologies
Cellular Technologies
  • Analog – Uses the complete frequency for one call.
  • Time Division Multiple Access (TDMA) – Divides the frequency into time slices, e.g. US-TDMA and GSM.
    • Analogous to many pairs of people speaking with pauses that are so small that no one notices the delay.
  • Code Division Multiple Access (CDMA) – Call signals are transmitted
  • simultaneously, but using different orthogonal codes.
    • Analogous to many pairs of people speaking simultaneously in mutually exclusive languages.
  • Advantages of CDMA
    • 10-15 Times the Capacity Improvement
    • Lower power usages => longer battery life and less over heating issues
    • Geared for Data
cellular systemic industry 2g
Cellular Systemic Industry – 2G

CDMA

(20% of World Market)

GSM

(70% of World Market)

Technology

Chips & Software Stack

Phone

Equipment

Service Providers

QCOM – 5% royalties

Nokia, Ericsson,

Siemens, etc.

Nokia, Ericsson,

Siemens,etc.

QCOM – 95%, MOT,

LSI, Samsung etc.

Samsung, LG, Sanyo,

Sony-Eric, Motorola.

Nokia, Ericsson,

Motorola etc.

LU, NT, Eric etc.

Nokia, Ericsson,

Siemens, Alcatel etc.

Verizon, Sprint PCS,

South Korea etc.

Nextel, Cingular,

T-Mobile, Europe etc.

mobile market
Mobile Market

GSM market

CDMA

cellular systemic industry 2 5 3g
Cellular Systemic Industry – 2.5/3G

GSM

(GPRS – 40Kbits/s

EDGE-70Kbits/s)

CDMA-2000

(1X- 256Kbits/s

EVDO-2.4 Mbits/s)

WCDMA

2.4 Mbits/sec

2005

Technology

Chips & Software Stack

Phone

Equipment

Service Providers

QCOM – 5% royalties

Nokia, Eric, Siemens,

QCOM- 5% royalties.

Nokia, Ericsson,

Siemens etc.

Nokia, Eric,

Siemens etc.

QCOM – 95%, MOT,

LSI, Samsung etc.

TI, Nokia, QCOM, LSI,

Samsung etc.

Samsung, LG, Sanyo,

Sony-Eric, Motorola.

Samsung, LG, Nokia,

Sony-Eric, MOT etc.

Nokia, Ericsson,

Motorola etc.

LU, NT, Eric etc.

LU, NT, Eric, Nokia,

Siemens, Alcatel etc.

Nokia, Eric, Siemens,

Alcatel, Motorola.

Some parts of Europe

Verizon, Sprint PCS,

Nextel, South Korea

Cingular, T-Mobile,

ATT, Europe etc.

China, India, Japan,

South America etc.

slide8

Qualcomm`s current business

?

  • Qcom - 95% of the market
  • Scale (partnered with IBM)
  • Nokia/Ericsson have an advantage

  • 5% royalties – guaranteed
  • There are more patent holders. How will they be compensated?

* 2002 Annual Report

pros and cons supporting wcdma
Pros and Cons supporting WCDMA

Advantages

  • WCDMA will be the only technology accepted in Europe (license)
  • Upside - Royalty revenues from WCDMA up to $10 Billion
  • Early adoption of WCDMA implies early increases in royalty streams

Disadvantages

  • QCOM less likely to be a major player in the chip market – cannibalize existing CDMA 2000 chip sales growth
  • Potential adopters of CDMA2000 will adopt a wait and see approach.
  • High uncertainty regarding demand (see previous slide)
qualcomm strategy in wcdma
Qualcomm Strategy in WCDMA

Qualcomm is assisting in the early development and adoption of WCDMA

  • This will cost Qualcomm significant dollars in R&D, specifically in optimizing WCDMA systems.
  • Partnering with a major chip manufacturer to achieve scale.

Hedging the bets

  • Qualcomm is also rigorously pushing CDMA2000, and also its solution of GSM/1x to convert existing non-European GSM providers to CDMA2000
wireless convergence
Wireless Convergence

Cellular

(3G)

Laptop

WI-FI (802.11/.15)

wireless data user segment analysis
Wireless Data User Segment Analysis

Wireless Access

Wireless Access

Corporate Access

Corporate Access

Commercial Services

Communication

Communication

qualcomm wi fi strategy
Qualcomm WI-FI Strategy
  • Qualcomm may incorporate WI-FI into its chips.
  • Reasons :
  • WI-FI can never directly compete with 3G cellular because
    • Low Coverage
    • No Mobility
    • Less security
  • WI-FI can add the following benefits to Qualcomm’s chips
    • Cheaper last mile solution for service provider
    • Higher data rates without mobility
  • Anything that grows the demand for data services is good.
the wireless data revolution
The Wireless Data Revolution
  • Wireless Data development phases:
  • Person to Person
  • Person to Machine
  • Machine to Machine
  • Cellular Data Strengths:
  • Mobile
  • DSL like Data rate
  • Cellular Data Weaknesses:
  • Input/Output Constraints
  • Lack of the “Killer Application”
conclusion
Conclusion
  • The wireless industry is a very systemic industry, composed of various other systemic chains within chains.
  • However, it is in everyone’s interest to grow consumer demand for wireless, specially wireless data, and this is what in the end drives the overall strategy of all the wireless companies, cellular and non-cellular.
  • The upcoming wireless data boom shall create great opportunities for the prepared entrepreneur.