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Nokia Mulls CDMA Move

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LR Mobile News Analysis
Light Reading
11/25/2003

Nokia Corp. (NYSE: NOK) is considering a move into the Code Division Multiple Access (CDMA) network infrastructure market, according to analysts attending the vendor's capital markets event in Dallas yesterday.

In a research note earlier today, Lehman Brothers analyst Stuart Jeffrey claims "Nokia acknowledged that it could consider entering the CDMA infrastructure market via acquisition."

Nokia itself isn't denying such a prospect. "Their assumption is about right," says Thomas Jönsson, communications director at its networks division. "During the Q&A session, our CEO Jorma Ollila admitted the issue was something they had looked at thoroughly but that he wanted to leave it at that for now."

Nokia is traditionally associated with the European-backed GSM (Global System for Mobile communications) and UMTS (Universal Mobile Telecommunications Service) sectors, where it is currently battling for top spot with Swedish rival Ericsson (see Nokia Preps for W-CDMA War and Nokia Claims WCDMA Lead).

UMTS is the 3G upgrade to the GSM standard, using a wideband-CDMA air interface on top of the GSM core network to increase voice capacity and boost data-transfer speeds to a potential 2 Mbit/s.

A "spread spectrum," digital cellular air interface technology mainly used in the U.S. and South Korea, CDMA operates in the 800MHz band and 1.9GHz PCS band and supports data transfer speeds between 14.4 kbit/s and about 2 Mbit/s (in its latest third-generation variants).

Any serious intent to enter the CDMA network business would certainly raise eyebrows in the infrastructure space. A recent Unstrung Insider report gives Lucent Technologies Inc. (NYSE: LU) a dominant share of 41 percent in this market, with Nortel Networks Corp. (NYSE/Toronto: NT) placing second, with twenty percent, and Motorola Inc. (NYSE: MOT) filling out the top three with 15 percent. LM Ericsson (Nasdaq: ERICY) and Samsung Corp. both boast an 8 percent share (see Ericsson's CDMA Cheer).

Such intense competition from established players leads analysts to doubt the vendor’s potential for success. “With the incumbent vendors there, it is going to be very difficult for them to penetrate the market, given the existence of players with proven CDMA experience,” comments IDC senior analyst Paolo Pescatore.

“I can’t see it happening at this point in time,” agrees Dr. Richard Windsor of Nomura Holdings Inc. “It would be too unprofitable for them.”

Current Analysis' senior wireless infrastructure analyst, Peter Jarich, views it as a long shot for several reasons. He cites the length of time it has taken Ericsson to build up steam in the CDMA market as a potential detractor to any deal.

“It’s also unlikely that Nokia would be able to acquire a market leader, so they would be left trying to grow share for a while. Consider the products they would acquire. Nokia has been vocal in its support of EV-DV -- who could they acquire that has shown support for EV-DV infrastructure?”

In Nokia's defense, Jarich does point out that the vendor has shown a focus on developing markets. “CDMA450 is proving to be a real solution, and EV-DV could be as well (a cheaper upgrade than GSM to UMTS). Plus, if Western Europe lets CDMA450 in, then Nokia might want to be in the mix.”

— Justin Springham, Senior Editor, Europe, Unstrung

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cdmasoftware
cdmasoftware
12/5/2012 | 2:10:34 AM
re: Nokia Mulls CDMA Move
Software for CDMA phones - under the most favourable price (ESN/A-key/SSD_a/SSD_b-Changers, Unlockers, Firmware, etc.). Pinouts, Circuits of cables. The menu of programming and other. http://cdmasoftware.com
lrmobile_castro
lrmobile_castro
12/4/2012 | 11:13:30 PM
re: Nokia Mulls CDMA Move
lets face it if the wcdma infra market was coming back, nokia would not fracture its efforts to include cdma.

if nokia is really looking at this its because WCDMA is not looking so good.
kronjob
kronjob
12/4/2012 | 11:13:29 PM
re: Nokia Mulls CDMA Move
The WCDMA vs CDMA2000x war is over. Some emerging markets are perhaps still up for grabs on either technology. The fact is that the vast majority of operators made a choice GSM or CDMA and will follow the upgrade path towards next generation networks. CDMA is a better technology (from the 90's not the 80's) but you won't buy a Beta video player when you have a collection of VHS tapes. Worldwide it's a 30%/70% split cdma/gsm and it will stay that way because both technologies are "good enough" not to switch them out completely. And unlike other network technology wars like IP vs ATM (all hail Cisco) the operator cannot have both, since end to end (mobile device to core network) it's all incompatible (engineer mind cramp coming). So Nokia, as a network infrastructure maker is "mulling" getting into the 2nd most popular network infrastructure technology.
El Rupester
El Rupester
12/4/2012 | 11:12:59 PM
re: Nokia Mulls CDMA Move
I feel churlish disagreeing with Kronjp's comments, but they are a couple of things I wouldn't agree with.

I agreed with the post when I read it, then thought some more and there are some comments I'd make which are perhaps important enough to mention and maybe discuss.


"The WCDMA vs CDMA2000x war is over. Some emerging markets are perhaps still up for grabs on either technology...Worldwide it's a 30%/70% split cdma/gsm"

But emerging markets matter *a lot*. To give one example, China is still fairly open; it _probably_ will have both (+ TD-SCDMA) but it hasn't declared, asnd one operator switching would affect that %age dramatically.


"CDMA is a better technology" Well, maybe...;) But (and this is intereresting because it actually contradicts the main point), two of the KOrean operators, staunch cdma2000 users for 2.5G are *switching* to WCDMA for 3G. I would agree with kronjp's logic, so I think we would both say that to have the pain of change, there must be some hellish powerful reason to justify it ? Given that these operators probably now more about advanced cdma2000 services in the world, their opinions are worthing listening too.

lrmobile_castro
lrmobile_castro
12/4/2012 | 11:12:54 PM
re: Nokia Mulls CDMA Move
I never implied there was a wcdma, cdma2000 battle.

I would simply expect nokia to spend their dollars on the opportunity that would yield the best return. cdma2000 networks are built. wcdma networks are not. It is reasonble to assume that nokia could improve their return with a small increase in share in wcdma rather than pursuing cdma2000.

But then again, if nokia is pursuing cdma2000 then that premise is called into question. nokia could just see cdma2000 as a strategic investment or they could be diversifying their portfolio or they might not expect as much growth from wcdma as some expect. they might expect to see a strong role for cdma2000 in the developing world. i don't know.

either way, its worth questioning why nokia would consider cdma2000.
IPobserver
IPobserver
12/4/2012 | 11:12:52 PM
re: Nokia Mulls CDMA Move
Yes itG«÷s very interesting that Nokia said it looked at the CDMA equipment market G«Ű even if nothing comes of it.

Just to speculateG«™ instead of being about EV-DV (as the article suggests), maybe this is about the low-end, volume market.


In GSM they ship a lot of low-end handsets to operators in G«£emerging marketsG«• that buy a package of Nokia networks and Nokia handsets. The same kind of strategy could probably work in CDMA, even if the network business never made much money.

Nokia is very open about its intent to win a greater share of the CDMA handset market, which is vital to achieving its target of 40 percent of the global handset market.
lrmobile_castro
lrmobile_castro
12/4/2012 | 11:12:39 PM
re: Nokia Mulls CDMA Move
good point. Another possibility might be margins. CDMA2000 might offer attractive margins. They are being driven out of wcdma pretty quickly.
kronjob
kronjob
12/4/2012 | 11:12:28 PM
re: Nokia Mulls CDMA Move
I might agree with:
"But emerging markets matter *a lot*. To give one example, China is still fairly open".

There is still some opportunity for cdma/gsm to gain/loose marketshare in china. But in China we are not talking "new" or "emerging" market. It's more a situation where a market as big as the entire USA in worth is controlled by one decision maker: The Communist Party of China.

A bunch of contracts were signed with Motorola, Lucent, Qualcomm on the day the US backed the entry of China into the WTO. CDMA or GSM it matters very little to China. Even with TD-SCDMA the technical pros and cons do not matters, it's the politcal traction that counts.

emerging markets: Russia and India.
data_sub
data_sub
12/4/2012 | 11:12:19 PM
re: Nokia Mulls CDMA Move
EV-DO is going to serve WCDMA a serious beating. I don't see how Nokia would be capable of buying Airvana. Airvana is not the desperate and bankrupt company like Tahoe Networks was. Airvana has strong partnerships with actual CDMA infrastructure OEMs.

I will agree that India is the real CDMA2000 showdown in the next 3-4 months. There is stuff that is going to come out of Japan that will really throw some weight towards 3G data (...car...). 2004 is the year for mobile data. 2005 is the year for acquisitions. Hopefully ineffectual standards, government interference, and corporate greed will not hinder mobile dataG«÷s growth.
psergeant
psergeant
12/4/2012 | 11:12:01 PM
re: Nokia Mulls CDMA Move
There's an easy explaination....

Nokia is pushing EVDV, and has announced rev C chips for handsets in 2003. However, Qualcomm wants EVDO to succeed before EVDV happens, so they have announced EVDV chips for CDMA2000 BTS with samples in late 2004, leading to a in service launch date at best in 2006.

Nokia wants to accelerate EVDV, hence the noise around entering the market. It won't work because Verizon and Sprint will only launch if a service is nationwide, and LU, MOT and NT are the incumbants, and all buy their BTS chips from QC.

checkmate.
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