Qualcomm Inc (QCOM)

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Will Lucent and Motorola survive 3G ? - report

America's two premier infrastructure manufacturers are paying dearly for their lack of UMTS development. Lucent Technologies, a late arrival to the UMTS marketplace, is managing to maintain an 11% share-of-market (SOM) in 2003, down from 17% in 2002. Motorola, on the other hand, has experienced a tumultuous drop in worldwide SOM, from 12% in 2002 to 4% in 2003. Technology research firm ABI Research wonders how long this operation can remain viable for the stalwart of Schaumburg.

While UMTS commands only an 18% unit share in 2004, it will skyrocket to almost 87% in 2009. While this may appear to be a disproportionate share, it must be noted that the signal propagation at 2.1 GHz is much shorter than the propagation at 850 MHz, where the competing CDMA 1x EV-DO typically operates.

The first quarter of 2004 has shown a renewed acceleration of contract wins. "3G launches are also beginning a gradual increase," explains Ray Jodoin, ABI's Director of Wireless Infrastructure Research, "while GSM service providers explore EDGE as a cost effective suburban and rural solution."

Spending for both 2G and 2.5G systems seems to be still declining slowly, while 3G spending remains highly competitive. There have recently been major reversals in terms of contract wins for 3G business, including the recent takeover from Nokia of Hutchison 3G's UK network by the NEC/Siemens collaboration. It is possible that this will be the year, finally, of 3G contract wins that stay wins.

There are some areas for opportunity in this market with the changes in contracts and shifts in timetables. The 3G market still represents the largest sector in terms of revenue growth over the other air interface technologies, but it could face a serious challenge from EDGE. ABI Research is forecasting a compound average annual growth (CAAG) rate of 52% for UMTS infrastructure from 2004 to 2009. That growth rate is up from previous forecasts, as we are observing this market's consumer acceptance, especially in Japan, where FOMA now enjoys over two million subscribers.

http://www.cellular-news.com/story/10773.shtml