Only one 3G mobile operator plans to use Qualcomm’s CDMA2000 standard.
Last year, it looked like 3G mobile standards would be a battleground. Qualcomm, which invented the CDMA standard that is a major force in 2G in the US, Japan and a few other markets, was promoting its new CDMA2000 standard. Meanwhile, the other major mobile equipment manufacturers including Ericsson, Nokia and Motorola were promoting their wCDMA standard. Both offered similar functionality to users, but the two were incompatible.
However, unlike 2G, where the continuing battle between CDMA and GSM makes international roaming beset with incompatibilities, it seems that 3G systems will be uniform. Almost all the operators to win licenses will use wCDMA. Japan’s KDDI is the only operator to have signed up for Qualcomm’s standard. In South Korea, where the government has reserved a 3G license for a CDMA2000 operator, nobody has bid for it. Network externalities have had their effect; few operators will sign up for a system that precludes customers from using their handsets abroad.
This looks like a blow for Qualcomm. The company makes a great deal of revenue from patents on CDMA and had CDMA2000 taken off, it would have made a great deal more. In addition, the majority of its revenues at present come from licensing chipsets for CDMA handsets. It would have had a major advantage in CDMA2000 chipset design, whereas in wCDMA there is less reason to favor Qualcomm over another firm.
Nonetheless, this is hardly a reason for despondency. wCDMA is based on CDMA as well, so Qualcomm will still be paid a royalty for every handset sold. Moreover, it’s still a major force in chipset design; many manufacturers that already use Qualcomm chipsets will stay with the firm they know when upgrading to 3G. Plus, it is still more experienced with CDMA technology than most of its rivals, so may win some extra wCDMA business too.
It would have been excellent news for Qualcomm had CDMA2000 taken off. But its failure will only be a minor blow to what will still be an extremely successful company.
