CDMA market to shrink

[jones]

http://www.ndtvprofit.com/homepage/s...ory=n&id=31859

CDMA technology is fast losing favour with telecom companies and handset makers who are switching to GSM, as it is less expensive to operate.

When Reliance communications shows signs of abandoning its CDMA backbone it is a clear that the technology is running into serious trouble.

And on Thursday, Qualcom, the world's biggest CDMA chip maker, gave Indian CDMA players one more reason to switch to GSM.

Qualcom said it would continue to charge seven per cent royalty from India operators, while it charges only two per cent in China, and zero royalty in USA.

CDMA market to shrink

Operators say this high royalty on CDMA sets makes the technology more expensive to operate and even handset makers seem to agree.

Nokia for instance, says it believes the CDMA market is going to shrink in the long term. It has ended talks to form a joint venture with Sanyo Electric Company to produce CDMA enabled handsets.

Nokia has said that it would gradually pull out entirely of CDMA phone manufacturing.

Industry experts believe that it is the cost differential between CDMA and rival GSM technology that is actually changing things in favour of GSM.

In the Indian context, a lot depends on the talks between Qualcom Chief Paul Jacobs who visits India next week and bosses of Indian telecom companies.

[strunke]

Originally Posted by jones

http://www.ndtvprofit.com/homepage/s...ory=n&id=31859

CDMA technology is fast losing favour with telecom companies and handset makers who are switching to GSM, as it is less expensive to operate.

When Reliance communications shows signs of abandoning its CDMA backbone it is a clear that the technology is running into serious trouble.

And on Thursday, Qualcom, the world's biggest CDMA chip maker, gave Indian CDMA players one more reason to switch to GSM.

Qualcom said it would continue to charge seven per cent royalty from India operators, while it charges only two per cent in China, and zero royalty in USA.

CDMA market to shrink

Operators say this high royalty on CDMA sets makes the technology more expensive to operate and even handset makers seem to agree.

Nokia for instance, says it believes the CDMA market is going to shrink in the long term. It has ended talks to form a joint venture with Sanyo Electric Company to produce CDMA enabled handsets.

Nokia has said that it would gradually pull out entirely of CDMA phone manufacturing.

Industry experts believe that it is the cost differential between CDMA and rival GSM technology that is actually changing things in favour of GSM.

In the Indian context, a lot depends on the talks between Qualcom Chief Paul Jacobs who visits India next week and bosses of Indian telecom companies.

It may shrink in india, but it will always be around in the US. It's like using kilometers instead of miles. CDMA is a very good technology, why you seem to hate Jones I'll never know. The fact that it is outlawed in the E.U. just demonstrates how superior it can be. Add to that the fact that European people in general have an underlying desire to be different from the United States in anyway they can, you now have GSM, an inferior technology in everything but voice fidelity, dominating the market.

[jimbo]

Too bad the evolution of GSM leads to...you guessed it...W-CDMA! Call it what you want...UMTS, HSPDA, whatever, it is still a form of CDMA. So I don't see how a reasonable person could conclude that the CDMA market is shrinking, because in fact it is growing as the GSM carriers deploy 3G in the form of WCDMA. Besides, the air-interface wars are growing tiring. Use whatever works for you, CDMA, WCDMA, GSM, AMPS, IS-136, or tin cans & string.

[walkguru]

Wirelessly posted (Walkguru's: Nokia6682/2.0 (3.01.1) SymbianOS/8.0 Series60/2.6 Profile/MIDP-2.0 Configuration/CLDC-1.1 UP.Link/6.3.0.0.0)

Originally Posted by jimbo

Too bad the evolution of GSM leads to...you guessed it...W-CDMA! Call it what you want...UMTS, HSPDA, whatever, it is still a form of CDMA. So I don't see how a reasonable person could conclude that the CDMA market is shrinking, because in fact it is growing as the GSM carriers deploy 3G in the form of WCDMA. Besides, the air-interface wars are growing tiring. Use whatever works for you, CDMA, WCDMA, GSM, AMPS, IS-136, or tin cans & string.

Well said, young man.

[jones]

It all boils Down to Operating Cost.
GSM Networks are Cheaper to Build and Operate.
Plus the Phones are Cheaper to Make due to High Volumes of Production.
http://today.reuters.com/stocks/Quot...DMA.XML&rpc=66

Thu Jun 22, 2006 12:27 PM ET



By Lucas van Grinsven, European Technology Correspondent

AMSTERDAM, June 22 (Reuters) - It is almost impossible for a mobile phone maker to earn any money with cheap CDMA handsets, which throws into question if there is a future for CDMA in emerging markets where most of the growth is, Nokia <NOK1V.HE> and industry observers said on Thursday.

"In this fragmented market, making money with low-end CDMA handsets is very difficult," Kai Oistamo, head of Nokia's Mobile Phones business unit, told Reuters in a interview.

Nokia said earlier on Thursday it would pull out of the production of CDMA phones altogether, blaming expensive licensing fees charged by Qualcomm <QCOM.O>, the sole supplier of all the chips for CDMA phones.

Nokia will concentrate instead on phones for GSM and advanced WCDMA mobile networks, used by more than 70 percent of the world's 2 billion cellphone subscribers, a number expected to double in five years, mainly in emerging markets.

Qualcomm, which was not immediately available to comment, has said its licensing terms are the same for everyone and are a low single digit percentage of the wholesale price of a phone.

Sign of rot in the CDMA market are everywhere.

In India, one of the world's fastest growing mobile telephony markets, CDMA operator Reliance Communications <RLCM.BO> has started applying for GSM frequencies.

Smaller Latin American countries have seen their sales of CDMA handsets collapse in recent months. In China, the world's biggest mobile phone market, CDMA phone sales have halved, according to market research group Strategy Analytics.

"There are signals that CDMA is increasingly being marginalised," said analyst Neil Mawston at Strategy Analytics.

That is also due to lower prices for the cheapest GSM handsets -- which cost less than $30 before local taxes, reflecting the GSM market's scale and low GSM royalties for major players such as Nokia, Ericsson <ERICb.ST> and Motorola <MOT.N>, which also developed the technology.

The cheapest CDMA phones cost between $40 and $50, but analysts said these are not widely available because the top CDMA phone makers LG <066570.KS> and Samsung <005930.KS> focus on high-margin, pricey models sold in the United States and South Korea.

The inability to take CDMA phones abroad and swap SIM cards is also blamed for the shrinking market share.

"SIM card swapping is important in countries like India where a vacationing family does not want to pay expensive domestic roaming fees," said wireless telecoms consultant Ben Wood at Collins Consulting in Britain.

A third factor threatening CDMA is Qualcomm's policy to require its customers to render their intellectual property if it is included in a Qualcomm chip, without compensation.

That is another reason why Nokia decided to pull out of CDMA, according to sources close to the company.

In the last 15 years, Nokia has pushed ahead with its own wireless technology development, and claims to have a larger share of patents in the main wireless technology of the future WCDMA than Qualcomm. Nevertheless, Qualcomm is still demanding the same terms for its WCDMA chips as for CDMA chips.

"In 1992, Qualcomm was a dominant player. But that's no longer the case," Oistamo said. "The tables have turned."

[strunke]

Ok, that's true, it is cheaper to make. Which is good for the company that has it. But as a consumer I don't want what is cheapest for the company to implement, I want the best quality for your money and in my opinion CDMA is it. Although I am curious how big WCDMA will be I don't know much about it..... Now is data implemented into it like GSM? Or is it going to be data only with seperate voice as gsm?

[jones]

GSM is cheaper because of Scale Economy (2 Billion Users).
UMTS for now per Cing PR is just Data (like EVDO) on
10 MHz Spectrum (5 up, 5 down).
Voice channels can be added in the Future.
I'm assuming once Analog/TDMA gets turned off
they'll use the spectrum for UMTS.
Even if Cing spectrum is 50/50 gsm/umts
Voice handoff is No problem.

[Scrumhalf]

It will be interesting to see how the situation in India pans out. There is a lot of posturing going on by both sides. Qualcomm bigwigs are scheduled to visit India later this month for talks with the DOT and the 2 major CDMA players, Reliance and Tata Indicom, so this may be mere posturing on Reliance's part to get Qualcomm to reduce the royalty fees which are at 7% in India. On the Qualcomm side, they have come out and said that they will not consider a reduction of royalty fees, but again this may be posturing prior to the meeting.

An additional twist is that Reliance is part of a conglomerate formed by legendary industrialist and businessman Dhirubai Ambani. After his death, his 2 sons have controlled the Ambani empire with some kind of gentleman's agreement on which companies one controls vs. the other. It turns out that the telecom company (Reliance Infocomm) used to be controlled by the older brother but has been taken over by the younger who may be trying to put his stamp on it by moving it into a direction that he wants.

This is going to be interesting to watch.

[bobolito]

UMTS is voice and data simultaneously right now. No need to add voice channels later as UMTS is built for both voice and data.

Originally Posted by jimbo

Too bad the evolution of GSM leads to...you guessed it...W-CDMA! Call it what you want...UMTS, HSPDA, whatever, it is still a form of CDMA....

I don't think that's the point being discussed here. They are not discussing the type of air interface. They are discussing the type of network. CDMA is one kind, the kind used by Verizon and Sprint (CDMAOne, CDMA2000, 1xRTT, EVDO, etc.).... and UMTS is another network that belongs in a different family.

Saying that the CDMA market is shrinking with respect to GSM is like saying that the TDMA and iDEN markets are shrinking with respect to GSM. However, TDMA, GSM and iDEN are all forms of TDMA, just like UMTS is a form of CDMA.

The GSM world just wants to make sure there is a distinction between the W-CDMA world and the CDMA world.

[bobolito]

Originally Posted by strunke

.... Add to that the fact that European people in general have an underlying desire to be different from the United States in anyway they can, .....

That doesn't seem to agree with some widely known facts:

- The US uses the English system while most of the world uses the metric system.
- The US uses Fahrenheit while most of the world uses Celsius.
- The US chose 850/1900 while most of the world agreed on 900/1800.
- The US phone system charges for both incoming and outgoing calls while everywhere else incoming calls are always free.
- The US banks are the only ones that charge you for using another bank's ATM. Outside the US bank ATMs don't charge, not even in Canada!

So it sounds to me the US wants to be different from the rest of the world in every way they can.

[scotsboyuk]

Originally Posted by strunke

The fact that it is outlawed in the E.U. just demonstrates how superior it can be.

Most Europeans probably don't care about what standard they use, they just want something that works. We live in an area of the world where there is regular free movement of people between many different countries, multiple standards would be a nightmare for business and holidaymakers.

European countries could have used CDMA instead of GSM, but since GSM was developed in Europe it is hardly surprising that it was chosen.

Add to that the fact that European people in general have an underlying desire to be different from the United States in anyway they can, you now have GSM, an inferior technology in everything but voice fidelity, dominating the market.

Are sweeping generalisations in fashion? First of all there is no such thing as 'a European people', there are people who live on the continent of Europe who can be collectively called Europeans, but they are not a single homogenised people. Apart from matters of geography and such like one tends to have to specify the actual nationality(ies) one means.

Secondly, for a continent with a 'desire to be different from the United States' it would seem that in some areas the rest of the world must also have that 'desire' or could it be that in some areas the U.S. is different from the rest of the world? For example, outside of the Americas the dominant frequencies for mobile phones are 900/1800/1900 MHz. Perhaps the rest of the planet had a meeting and decided they simply had be different to the U.S. there? I imagine that football (soccer) is so popular because the rest of the planet decided that it had to be different to the U.S. Now that I think of it, people who pronounce the 'i' in aluminium must be doing it to be different from Americans!

GSM is the dominant standard because it is a fairly open standard and doesn't have Qualcomm taking royalties. If you look into the situation you will see that GSM was actually not intended to be a global standard, it was developed for use in Europe. Other areas of the world adopted it.

[scotsboyuk]

Originally Posted by strunke

It may shrink in india, but it will always be around in the US.

The U.S. has a population of around 300 million, not all of whom use CDMA. India has a population of over a billion. Even if CDMA only managed to gain a 25% market share in India it would have more customers than in the U.S.

The North American CDMA networks can continue using CDMA for as long as they like, but as the majority of the plante increasingly uses standards, which are incompatible with their networks they will find that they have fewer and fewer manufacturers to call upon.

It comes down to simple economics; do you maintain a costly R&D division, marketing campaigns, etc for products that are being sold to a relatively small market e.g. a few hundred million people, or do you devote all your resources to a relatively large market e.g. a couple of billion people?

[Bugwart]

Originally Posted by scotsboyuk

GSM is the dominant standard because it is a fairly open standard and doesn't have Qualcomm taking royalties.

True, but GSM has its own royalties. They are paid to more than one company, but they still exist.

[scotsboyuk]

@Bugwart

That may very well be true, but it would seem that GSM's financial arrangements appealled to more networks than Qualcomm's.

[strunke]

scotsboyuk and bobolito.....

Yes I know that the U.S. is the same way. But you have to admit there is a general dislike for Americans in Europe. I mean wouldn't you say scotsboyuk, you live there. I'll remember to add the 's' next time sorry

Keep in mind I was fairly annoyed with the constant postings of Jones and his press releases. I just don't understand why he doesn't like CDMA so much lol.

The outlawed thing was kind of out there but I needed ammo .....

The statement about it being around for a long time is true. The US in the interest of competition will probably keep CDMA regardless of who was GSM. Until a new network technology is brought about that is better then both.

[Scrumhalf]

I think we need to step back a bit here and disconnect nationalism from the technology choice debate.

There are American companies supplying both handsets and infrastructure for GSM and likewise there are foreign companies supplying handsets and infrastructure for CDMA. If CDMA were to disappear (and I don't mean WCDMA/UMTS/HSDPA here) and the whole world were GSM only, many American companies will do just fine.

Short of Congressment representing districts in the San Diego area, the US government has no vested interest in either GSM or CDMA. In fact, this is clear from the whole approach of how cellular has evolved in the US, pretty much a laissez faire approach by the government.

[Telekom]

Originally Posted by Scrumhalf

Short of Congressment representing districts in the San Diego area, the US government has no vested interest in either GSM or CDMA. In fact, this is clear from the whole approach of how cellular has evolved in the US, pretty much a laissez faire approach by the government.

Which is just what happened in Iraq! Mr Isa in fact tried to convince the powers that be that the new wireless system for Iraq had to be CDMA! It was the only patriotic thing to do (funny since Qualcomm's in his district ain't it?) Never mind that all the surrounding countries in the region pretty much all use GSM.

[kashkanantambu]

Originally Posted by jimbo

Too bad the evolution of GSM leads to...you guessed it...W-CDMA! Call it what you want...UMTS, HSPDA, whatever, it is still a form of CDMA. So I don't see how a reasonable person could conclude that the CDMA market is shrinking, because in fact it is growing as the GSM carriers deploy 3G in the form of WCDMA. Besides, the air-interface wars are growing tiring. Use whatever works for you, CDMA, WCDMA, GSM, AMPS, IS-136, or tin cans & string.

Though GSM will evolve into W-CDMA, the two technologies are still incompatible. W-CDMA uses the multeplexing scheme of CDMA, but is not part of the CDMA standard.

[kashkanantambu]

Originally Posted by bobolito

So it sounds to me the US wants to be different from the rest of the world in every way they can.

I will have to agree.

Lets not forget that the US is "young" in comparison to the rest of the world. The simple fact that many Europeans wanted to be "different" lead to the EXODUS to the Americas and this is when they changed everything so to be different from the rest.

I can go on and on but you get the drift.