Qualcomm: Leading The Wireless Revolution: Group Selected Case Analysis

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Group Selected Case Analysis

QUALCOMM: LEADING THE WIRELESS


REVOLUTION

Electronic Commerce
Management 671
Radford University
Spring 2001

Elizabeth Curl
Karl Zartarian
Mike Biscotte

Group Selected Case Analysis

QUALCOMM: LEADING THE WIRELESS REVOLUTION


Contents

Page

I.

Introduction

II.

Description of the Company

III.

Description of the Industry

IV.

Description of Third Generation Wireless

V.

Analysis of Porters Five Forces

VI.

STEEP and SWOT Analysis

VII.

Business Model

VIII.

Target Markets

IX.

Company Core Competencies

X.

Company and Industry Financial Information

XI.

Key Company Challenges

XII.

Problem Statement

XIII.

Strategies and Recommended Actions

XIV.

Summary

XV.

References

a.

INTRODUCTION
There is a revolution in the world of communications and information transfer
today, and this revolution is wireless.
The Internet has affected the way people work, play, and communicate.
Shopping, research, and messaging are all popular uses of PC-based internet
applications. The internet has streamlined business, personal, and financial
transactions, and provides a cost-effective method of communications.
Cellular phones have also affected the way people communicate. Cellular usage
has exploded as society has embraced the ability to talk with each other any time
in any place. Safety and convenience issues have become significant drivers in
its rise in popularity.
The next generation of wireless devices, however, will merge these two
functionalities. Consumers desire access to internet-based activities from their
wireless handsets. Businesses want to perform all manner of transactions in a
mobile manner. Consequently, the companies that can support and standardize
the required wireless equipment and technology will prosper.
QUALCOMM is such a company. QUALCOMMs patented technologies form the
basis for the global wireless platforms. Their significant research and
development activities have allowed them to stay at the forefront of wireless
technology, and their broad patent base provides a significant revenue stream.
QUALCOMM, however, faces challenges from several fronts if they are to retain
their industry leadership position. These challenges come from other chip
manufacturers, alternate wireless standards, and government-sponsored
communications systems.
This case analysis will document QUALCOMMs present situation, investigate the
overall industry, discuss the challenges QUALCOMM faces, and provide
recommended actions for the future.

b.

DESCRIPTION OF THE COMPANY


QUALCOMM, Inc. is engaged in developing and delivering digital wireless
communications products and services based on a digital technology called
Code Division Multiple Access (CDMA). CDMA is a method of transmitting
information securely over radio frequencies. QUALCOMM owns several patents,
which are essential to the core of their business worldwide, supporting various
aspects of CDMA technology.
QUALCOMM was founded by Professor Irwin Jacobs and Professor Andrew
Viterbi in 1985. Their vision was to create a company focused on Quality
Communication for the public sector, hence the name QUALCOMM.
QUALCOMMs first headquarters was in an office located above a pizza parlor in
San Diego, California. Professors Jacobs and Viterbi began research and
development on adapting CDMA, a secure wireless transmission technology that
was developed for the military during World War II, for commercial use.
QUALCOMM was incorporated in 1985 and by 1989 they had proposed CDMA
technology to the wireless industry. QUALCOMM currently has over 400 U.S.
patents and over 900 U.S. patents pending related to CDMA technology.
Approximately 12 percent of the 550 million consumers who utilize first and
second generation wireless technology employ networks that are based on
QUALCOMMs CDMA technology. QUALCOMMs major emphasis is the global
implementation of their standard, cdma2000, for third generation wireless.
QUALCOMM, Inc. is divided into several business units, including QUALCOMM
Technology License (QTL), QUALCOMM CDMA Technologies (QCT), and
QUALCOMM Wireless Systems (QWS).
QUALCOMM Technology Licenses (QTL) generates fees and royalties from
manufacturers use of CDMA technologies. The company has licensed its CDMA
patent portfolios to more than 90 telecommunications equipment manufacturers.
QUALCOMM CDMA Technologies (QCT) is the worlds leading developer of
CDMA integrated circuits, system software, and tools for wireless device and
network infrastructure equipment manufacturers. QCT has shipped more than
350 million CDMA integrated circuits worldwide. QCT now manufactures circuits
featuring wireless position location technology through its subsidiary, SnapTrack.
QCT generates revenue from the sale of CDMA-based products.
QUALCOMM Wireless Systems (QWS) provides mobile communications and
logistics management systems and services to the transportation industry
through its OmniTRACS systems. QWS also develops and manufactures
gateways and devices for the Globalstar system, an advanced satellite network
offering continuous mobile voice and data services.

QUALCOMM has several other ventures, including a project with Technicolor


Inc. to develop a digital delivery system for the distribution of movies, and the
Eudora email program which they have developed and marketed.
QUALCOMM employs over 6,000 people worldwide, with headquarters in San
Diego. Their stock is traded on the NASDAQ under the symbol QCOM and their
website can be viewed at www.QUALCOMM.com. A list of their executive
officers is shown in Figure 1.
FIGURE 1 QUALCOMM EXECUTIVE OFFICERS
Name
Executive Office
Irwin Jacobs
Chairman of the Board and Co-Founder
Richard Sulpizio
President
Anthony S. Thornley
EVP and Chief Financial Officer
Steven R. Altman
EVP
Franklin P. Antonio
EVP and Co-Founder
Paul E. Jacobs
EVP

III.

DESCRIPTION OF THE INDUSTRY


The wireless telecommunications industry is poised for intensive growth over the
next few years. The International Data Corporation (IDC) estimates that from
1998 to 2000 wireless users worldwide increased from 303.5 million to 550
million. The IDC also estimates that the number of wireless customers will
increase to over 1.1 billion users by the year 2003. The wireless
telecommunications industry is a dynamic system that involves the complex
interaction of a large number of groups including international and national
standard-making bodies, national governments, wireless network providers, and
hardware manufacturers. The wireless telecommunications industry consists of
multiple mobile networks including the Internet, GSM-MAP, and ANSI-41. All of
these networks operate within different radio frequency bands with different
access modes such as CDMA, GSM, PDC, and TDMA.
Key measures of wireless technology are peak data rate, voice quality and
spectral efficiency/capacity, roaming, and mobility. Spectral efficiency/capacity is
a measure of how efficient a particular technology (for example, GSM, CDMA, or
TDMA) utilizes government authorized radio spectrum for public communication.
Currently, there are three generations of wireless technology, referred to as first
or 1G, second or 2G, and third or 3G. The key measures steadily improve with
each successive generation.
Each of the national governments, network providers, and hardware
manufacturers champion their own standard and access mode. This favoritism
has resulted in a host of regional networks that are generally found within
national borders. While the average wireless user can roam anywhere that a
GSM network (the predominant network in Europe and Japan) is in place, the
technology is limited in quality, peak data rate, and spectrum efficiency. The
wide variety of networks, standards and access modes located regionally
prohibits the average consumer from using their personal wireless system
globally.
Currently, first and second generation wireless technologies are the predominant
technologies worldwide. However, with the increasing reliance of consumers and
businesses on the Internet, e-commerce transactions, streaming media, and
video conferencing (applications that require high data rates, improved quality,
and excellent spectrum efficiency) these first and second generation
technologies are rapidly becoming inadequate. The industry, and QUALCOMM
in particular, is making a concerted effort to develop multi-mode, multi-band and
multi-network devices that will allow seamless worldwide roaming.

I.

DESCRIPTON OF THIRD GENERATION WIRELESS


The International Telecommunications Union (ITU) has adopted one global
standard based on CDMA technology. That standard, however, emphasizes two
major options for the third generation wireless service. Those options are
WCDMA and cdma2000. While WCDMA (wideband CDMA) is based on CDMA
technology, it is a generic standard that was produced by a variety of standardmaking bodies and several companies. However, cdma2000 is exclusive to
QUALCOMM and is patented by them in every respect.
The battle between WCDMA and cdma2000 is an instance where QUALCOMMs
customers are also their competitors. Wireless operators that implement the
WCDMA standard do not pay royalties or licensing fees to any company since
the standard is generic. However, the manufacturers of the chips used in the
WCDMA equipment are required to pay licensing fees and royalties for those
aspects of CDMA technology that are used that QUALCOMM has patent rights
to. Separately, wireless operators that implement the cdma2000 are required to
pay fees and royalties to QUALCOMM for using their standard. QUALCOMM
earns revenue from the cdma2000 chip manufacturers as well. Therefore,
although QUALCOMMs strategy is to implement cdma2000 technology
worldwide and they are competing head-to-head with WCDMA, they continue to
generate revenue from WCDMA users.

V.

ANALYSIS OF PORTERS FIVE FORCES


Porters five forces are used to analyze QUALCOMM relative to its industry. This
analysis includes QUALCOMMs suppliers, buyers, and rivals, and any new
market entrants and substitutes.
A.

Suppliers
QUALCOMM depends on third parties for manufacturing, assembling and
testing of their integrated circuits. Most of these suppliers are sole source
vendors and they are used in the start-up phase of a product life cycle.
This is risky for QUALCOMM, because should any of these suppliers ally
themselves with QUALCOMMs industry rivals, it could delay product
development and hinder sales revenue. In addition, should any of these
suppliers allocate capacity to other products, it could hinder
QUALCOMMs product development.
Much of QUALCOMMs intellectual capital is developed by their own
technical personnel. Should they lose any of these qualified personnel to
industry rivals, it could cause them to lose their intellectual property.
Designers of CDMA integrated circuits, as well as companies that promote
non-CDMA technologies, include Ericsson, Intel, LSI Logic, Lucent,
Motorola, Nokia, Nortel, Philips, Samsung and Siemens. All of these
competitors are also licensees of QUALCOMM. These suppliers are also
buyers, but could harm QUALCOMMs product development if they were
to align themselves with other network providers. These suppliers can
also obtain licenses from QUALCOMM to manufacture CDMA integrated
circuits that compete directly with QUALCOMM products.
Satellite systems providers are necessary for QUALCOMMs success with
OmniTRACS, Truckmail, and Omniexpress. Transponder capacity is
critical for these systems to be successful. If the capacity were not
adequate, it would harm their business and operations of these systems.
Satellite systems could also affect the Globalstar product. Globalstar is a
satellite based wireless telephone. If the satellite network should lose
capacity or change, it would have adverse affects to their revenues.

B.

Buyers
QUALCOMM has buyers in the transportation, entertainment, and
communication industries. Some of QUALCOMMs buyers in the
communication industry could pose competitive problems. A high
percentage of QCTs revenue, 39%, is generated from agreements with
Samsung Electronics, LG Information, and Hyundai Electronics of Korea.
QUALCOMM needs to expand their customer base since the loss of one
or more of these customers would pose a significant loss of revenues and
could affect QUALCOMMs profitability.
8

C.

Industry Rivals
QUALCOMM may be threatened by existing rivals who have more
established relationships and distribution channels. These rivals could
also form alliances among themselves or existing customers, which could
affect buyers decisions to purchase products or license technology from
QUALCOMM. This could also cause new competitors or alliances among
competitors to emerge, causing QUALCOMM to lose market share.

D.

New Entrants
New entrants might consist of competitors offering low cost terrestrialbased products, in addition to future satellite-based systems, may intensify
competition in new markets and impact margins. Telephone companies
can pose threats as new entrants into the market. If they enter with newer
technology for 3G networks, this could impact QUALCOMM growth. An
independent military contractor could emerge as a new entrant into the
market with a radically different technology.

E.

Substitutes
New satellite systems could be a substitute for CDMA. Also, new GSM
technology for 3G networks could replace CDMA altogether. Another
substitute threat is WCDMA for the European network system. Lastly, new
land-based technology as substitute for CDMA or a different form of
wireless could pose a substitute threat to QUALCOMMs technologies.

VI.

STEEP AND SWOT ANALYSIS


A situational, technological, environmental, economic, and political (STEEP)
analysis and a strengths, weaknesses, opportunities, and threats (SWOT)
analysis were performed in order to to better understand QUALCOMMs potential
for future success.
A.

B.

The STEEP analysis reveals the following:


1.

Situation Wireless communication and technology is in its early


product life cycle stage. Many new forms of technology could form
over the next decade and new companies and alliances may form
as the industry matures. Satellite communication is evolving and
may prove to be a viable alternative to land-based wireless
technology.

2.

Technology In the early stages. New technology is rapidly


emerging and QUALCOMM needs to maintain an intellectual
advantage in order to meet their financial goals.

3.

Economic The current economic situation is uncertain. In fiscal


year 2000, QUALCOMM depended on 47% of its revenue from
international customers. A faltering overseas economy will
adversely affect their revenue and profits. Additionally their
revenue will be adversely affected if consumer spending in the
United States continues to stagnate.

4.

Political As noted above, with 47% of revenue dependent on


international customers, should the political environment change in
Korea or China, QUALCOMM will also be directly affected. Also,
political situations in Europe may play a part in QUALCOMMs
success of entering the European market.

The SWOT analysis reveals the following:


1.

QUALCOMMs Strengths:
a. CDMA technology has a high adoption rate in the North
American market.
b. Their patent protection ability is a key competence as they
aggressively protect their intellectual property.
c. QUALCOMM is financially sound with stable earnings,
profitability, and growth providing them with necessary
resources for continued expansion in research and
development.
10

2.

Competitors Strengths:
a. Existing royalty-free, cross-licenses for competing and emerging
technologies.
b. Longer operating histories and established presence in key
markets.
c. Greater brand recognition.
d. Access to larger customer bases.
e. Greater financial, sales, marketing, manufacturing, distribution,
and technical resources.

3.

QUALCOMMs Weaknesses:
a. Loss of any major customer. Of the QCT business segment,
39% of their revenue is a result of three customers in Korea.
Sales to Globalstar accounted for 30% of revenue of the
QWS business segment.
b. Dependence on a limited number of third party manufacturers to
produce and test products. As explained in Porters five
forces, any disruptions in the operations of these third
parties could harm delivery obligations.
c. QUALCOMM provides financing for CDMA networks to their
licensees. If these customers default on their loans,
QUALCOMMs financial position could be harmed.
d. Globalstar has high infrastructure costs, which could adversely
affect the growth and market acceptance of their product
and directly affect QUALCOMMs revenue and profitability.
e. QUALCOMM has poor overseas sales channels, specifically in
Europe. They also spend exhaustive amounts of money in
legal proceedings for patent protection.

4.

Competitors Weaknesses:
a. The competitors network technology mainly focuses on GSM
technology. If they do not emerge with newer technology to
meet 3G networks it could limit their growth.
b. Competitors have limited North American market share.

5.

QUALCOMMs Opportunities:
11

a.

Industry need for third generation wireless


communication.

b.

Emerging markets in Asia, specifically China and India.


These two markets have a population of approximately 2.2
billion people combined, or 40% of the world population.

c.

Spinco will help to make their licenses ubiquitous.

d.

CDMA adoption will generate significant revenue growth.

6.

Competitors Opportunities:
a.

Industry need for third generation wireless


communication.

7.

b.

Emerging markets in Asia, specifically


China and India. These two markets have a population of
approximately 2.2 billion people combined, or 40% of the
world population.

c.

Adoption of alternative standards may open


the door for new products.

Common threats for both QUALCOMM and its competitors:


a.

Rapid technology change could make existing products


obsolete.

b.

Poor execution of new product deployment could affect


market share and revenues.

c.

Poor financial health of major customers will adversely affect


earnings and profitability.

d.

International instability and foreign exchange fluctuation may


hinder growth and revenues.

e.

Acceptance of technology for third generation networks.

f.

Health risks. There have been many white papers published


in the medical field debating whether radio frequency
emissions from wireless handsets may be linked to various
health concerns, including cancer. This could discourage
users of this product, thus affecting sales of technology
licensing.
12

VII.

BUSINESS MODEL
QUALCOMMs basic business model is centered on their innovative and creative
abilities. QUALCOMM invests heavily in research and development with a focus
on creating new products and services. In 2000, they invested 23% of revenues
in research and development. They patent their new ideas and use the ideas to
create new products and services. QUALCOMM generates revenue through
licensing fees and sales. A diagram of QUALCOMMs basic business model is
shown in Figure 2.

FIGURE 2 QUALCOMMs BUSINESS MODEL

Research and Development


Invest in Intellectual Capital

Patent New Technologies

New Products and Services


- manufacturing
- acquisitions
- partnerships

Revenue Stream
- Sales
- Licensing Fees
- Royalties

13

QUALCOMM refers to its specific business model as the Virtuous Cycle. The
Virtuous Cycle centers on the development, implementation, and application of
their CDMA technology. QUALCOMMs business strategy is to innovate new
technologies with large market potential to significantly increase wireless traffic.
Increased wireless traffic translates to an increased need for high data rate and
efficient technology, an increased subscriber base, and increased revenue.
QUALCOMMs objective is to meet this market need using the benefits of CDMA.
The key to the QUALCOMM business model or Virtuous Cycle is their
emphasis on technology patents. QUALCOMM develops ideas based on CDMA,
patents those ideas, then develops CDMA-based applications designed to
increase wireless usage by increasing usage per subscriber and the number of
subscribers. They promote CDMA technologies and products by licensing
CDMA patents to manufacturers and by making necessary partnerships,
acquisitions, and start-ups to enable CDMA product and service advancement
worldwide. All of QUALCOMMs revenues are generated through the licensing
fees, royalties and product sales based on CDMA.

14

VIII.

TARGET MARKETS
QUALCOMM is a major part of the wireless telecommunications and application
industry and targets all the buyers that comprise that market. QUALCOMM also
targets other industries that are served by the wireless telecommunications
industry such as the satellite, transportation, and entertainment industries. They
also provide services to the U.S. Government.
QCT targets all consumers along the wireless telecommunication value chain.
Those consumers include wireless network providers and hardware
manufacturers including network infrastructure, chip (or integrated circuit),
handset (or phone), laptop, hand-held computer, and other mobile devices. QCT
provides products to over 30 handset manufacturers. They also provide
complete system solutions for wireless networks. First, they provide products that
allow manufacturers to design very small, feature-rich handsets. Second, they
provide network infrastructure manufacturers integrated circuits and system
software so that network infrastructure manufacturers can provide standardscompliant processing for wireless voice and data.
QUALCOMM targets satellite industries that are serviced by wireless
telecommunications. QUALCOMM, in partnership with Loral Space and
Communications, created Globalstar in order to promote and develop CDMA
based technology in the wireless telecommunications industry that is enabled by
satellites. Wireless Systems, another division of QUALCOMM, targets the
satellite industry by designing, developing, manufacturing and deploying the
infrastructure, handset products and modems for use in Globalstars CDMA
based networks.
QUALCOMM targets the transportation industry with products that enable
position location, tracking technology, and intensive data transmission to various
commercial fleets and automobile manufacturers. Examples of their current
customers are the Ryder truck fleet and Ford Motor Company.
Two other target markets for QUALCOMM are the entertainment industry and the
U.S. Government. First, in the entertainment industry, QUALCOMM has
partnered with Technicolor to provide end-to-end digital cinema systems for
delivering motion pictures to theaters worldwide. Secondly, QUALCOMM
performs a variety of work for various departments and agencies of the U.S.
Government involving commercial related technologies.

15

X.

COMPANY CORE COMPETENCIES


QUALCOMMs success has been based on several core competencies. These
core competencies have allowed QUALCOMM to become a market leader in the
industry, and are described below.
A.

Research and Development (R&D)


Since its inception, QUALCOMM has been committed to R&D. From its
first commercial program, the OmniTRACS mobile communications
system, to its latest alliances, QUALCOMM has always strived for
innovation. A major part of QUALCOMMs business model is based on
developing innovative products and services, then licensing these
products and services across a large number of users.

B.

Patent Defense
In order to protect the advantages of their R&D efforts, QUALCOMM has,
by necessity, developed and maintained a very aggressive and effective
stance toward defense of its patents. They maintain a large staff of inhouse patent lawyers to protect their patented products and technologies.

C.

Startups/Spinoffs
As another outgrowth of its R&D efforts, QUALCOMM has become very
effective at developing internal, or identifying external, innovative
companies for startup or spinoff opportunities. In fact, QUALCOMM has
set up QUALCOMM Ventures as a separate subsidiary to fund potential
startups.

D.

Visionary Management
Tying these qualities together is the overall vision of QUALCOMMs
management. QUALCOMMs goal is to grow the CDMA markets
worldwide. By supporting and fostering new and innovative companies
and products which advance CDMA technologies, QUALCOMM helps
support the Virtuous Cycle.

16

XI.

COMPANY AND INDUSTRY FINANCIAL INFORMATION


QUALCOMMs patent-intensive focus is a unique business model within the
wireless telecommunications industry. No other wireless telecommunications
company has the same single-minded focus on the promotion of one technology
nor does any other company have a viable technology that competes directly
with CDMA. QUALCOMM is also unique in that all of the global standards that
the International Telecommunications Union, which is the international standardmaking body, has adopted are based on CDMA technology. Even though
QUALCOMM does not compete head-to-head with any companies with a similar
model, they do, however, compete with several companies operating in specific
aspects of the telecommunications industry.
Since QUALCOMMs major thrust is the global implementation of cdma2000,
their major competitors are network providers that promote the adoption of
WCDMA based networks. Alcatel, a wireless network provider based in France,
is a major competitor with QUALCOMM in this area, along with Ericsson.
Some of QUALCOMMs competitors are also their customers. For instance,
QUALCOMM licenses CDMA technology to several chip manufacturers that
make chips for CDMA-based handsets. Some examples of chip manufacturing
customers are Texas Instruments and National Semiconductor. However,
QUALCOMMs own QCT division manufactures chips to sell to handset
manufacturers as well. QCT competes directly with Texas Instruments and
National Semiconductor. QUALCOMMs intention to spin-off the QCT division
with the creation of Spinco, however, is meant to minimize competition with other
chip manufacturers and facilitate access to the patents for other standards.
Figure 3 provides basic financial information on QUALCOMM and some of their
major competitors. QUALCOMM had $3.2 billion in revenues in 2000.
Approximately 39%%, 22%, 22% and 17% of the revenue stream (Figure 4) was
generated by the QCT, QWS, QTL divisions and other income, respectively.
QUALCOMM has a price-to-earnings ratio of 364.6, which is significantly higher
than any of their competitors. They also paid off their debt in 2000, which
generated a much higher than average current ratio. QUALCOMMs Profit
Margin and Return- on- Assets are lower than the average for the S&P 500.

17

FIGURE 3 FINANCIAL INFORMATION


Co.

Industry

Sales
(Billions)

Current
Ratio

Profit
Margin

P/E

ROA

QCOM

Standards
Chip Manu.

3.9

5.72

4.91

364.6

2.3

ALA

Network

28.2

1.7

4.8

31.1

3.3

NSM

Chip Manu.

2.31

2.55

19.2

10.3

18.2

TXN

Chip Manu.

11.9

2.88

26.0

18.3

17.4

AWE

Network

9.6

2.0

-2.1

NA

-0.68

ERICY

Handset Manu
Chip Manu.

29.5

1.3

6.9

22.4

9.4

S&P 500

Index

1.61

12.36

28.1

8.81

QCOM - QUALCOMM
TXN - Texas Instruments
ERICY - Ericsson NSM - National Semiconductor

ALA - Alcatel
AWE - AT&T Wireless

FIGURE 4 - REVENUES

Total $3,197M
39%
17%

$1,239

$532

QCT (CDMA)
QWS (Wireless Systems)
QCT (Licensing)

$705

$721

22%

22%

18

Other (Eudora, Digital


Cinema)

XI.
KEY COMPANY CHALLENGES
QUALCOMM faces a number of significant challenges, including asserting
cdma2000 as the dominant worldwide standard, maintaining competitive
advantage in developing new technologies, and continuing to manage their
growth.
First and foremost is the struggle for a dominant worldwide wireless standard.
The market has not yet determined which standard they will ultimately choose.
Currently the choices are cdma2000 or WCDMA. QUALCOMMs ultimate
business focus is to ensure that cdma2000 is the dominant standard.
However, even though third generation wireless is in the early stages of
implementation, the industry appears to be choosing WCDMA, particularly in
cases of newly issued spectrum. The industry seems to prefer cdma2000 when
implementing third generation wireless in pre-existing spectrum. QUALCOMMs
management recently commented on reasons why industry is looking to WCDMA
and offered counterpoints as to why cdma2000 is the better alternative:
Industry:
QUALCOMM:

WCDMA offers a natural path for GSM subscribers.


cdma2000 requires one chip; no new spectrum; no
further development or testing of networks like
WCDMA

Industry:

WCDMA time to market is advantageous to


cdma2000
cdma2000 development process is further along;
WCDMA standard has not even been finalized

QUALCOMM:
Industry:
QUALCOMM:

Industry:
QUALCOMM:
Industry:
QUALCOMM:

WCDMA favors economies of scale due to dominant


market share
Cost per megabit much less than WCDMA; All new
cdma2000 handsets will be have backward
compatibility; WCDMA will not
Intl roaming with WCDMA easier due to dominant
global standard
Introduced MSM6xxx chips compatible with
cdma2000 and GSM
WCDMA has better performance
cdma2000 beats WCDMA based on data rates
19

Also, risks exist relative to QUALCOMMs capability in developing and


introducing new products and services in a timely manner. QUALCOMMs
historic advantage has been its ability to develop new technologies. However,
this can be a very difficult talent and skill to consistently display. If QUALCOMM
cannot maintain its entrepreneurial mentality towards new products, its ability to
develop new products and subsequently collect royalties will be significantly
diminished.
QUALCOMM must also carefully manage its growth and smoothly assimilate its
various acquisitions, mergers, and spinoffs. QUALCOMM has experienced
significant growth, and plans to continue this expansion. This growth requires
significant management, particularly at the middle levels, to ensure consistency
of product and application. If this growth is not properly managed, QUALCOMM
will suffer myriad operational issues.
Lastly, QUALCOMM will be operating in an extremely competitive business
environment. For all the reasons that the future might be bright for QUALCOMM,
it might be equally bright for others in the wireless industry. QUALCOMMs
advances will be hotly contested at every turn, and it will require significant effort
and resolve by QUALCOMM to overcome this competition.

20

XII.

PROBLEM STATEMENT

The overarching basic problem statement for QUALCOMMs future is as follows:


How will QUALCOMM establish cdma2000 in the global market for
third generation wireless communications?

21

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