Who Might Benefit Most From a CDMA iPhone?


Chipmaker Qualcomm (s qcom) is poised to continue reaping the benefits of increased Google Android (s goog) smartphone adoption, while also being well positioned for additional opportunities to power future Apple iPhones (s aapl), including a CDMA version for Verizon Wireless (s vz) in the U.S. Qualcomm’s relatively rosy outlook is the focus of two separate analyst reports: Mark Sue from RBC Capital Markets and Ashok Kumar of Rodman & Renshaw each penned their own research notes on Qualcomm today.

This year, Qualcomm has practically owned the blossoming Android device market; while Samsung and Texas Instruments (s txn) power a few handsets such as the Samsung Galaxy S and Motorola Droid X (s mot), nearly all of HTC’s Android phones use Qualcomm’s MSM line of chips for processing and connectivity. HTC currently builds the widest range Android handsets compared to any other manufacturer, and if the company hits sales targets, it will follow behind Nokia (s nok) and Samsung as the no. 3 original equipment maker in the world of phones in terms of yearly sales.

Such reliance on Qualcomm’s MSM chipsets for Android phones is helping to drive Qualcomm sales forward; Sue estimates that in the September-starting quarter alone, the company will have shipped 112 million MSM chipsets. Kumar concurs, with an estimate range of 110m to 115m, and believes that manufacturing a CDMA iPhone in December could begin to add 10 million more chip sales each quarter for Qualcomm by mid-2011. And if by chance, someone else’s chips power a CDMA iPhone, as the holder of key CMDA patents, Qualcomm would still earn royalties on every CDMA iPhone sold.

Past successes don’t always equate to continued success in the future, however. Kumar suggests that a while a CDMA Verizon iPhone is likely to use Qualcomm chips, the playing field for an iPhone for LTE networks of the near future is wide open. Baseband and system chipsets from ST-Ericsson and Intel (s intc) will challenge Qualcomm in a next-generation iPhone, says Kumar. Winning the chip contact for one phone from one manufacturer may not sound like much, but Qualcomm and its competitors would likely be thrilled to power an LTE iPhone in the coming years. After all, Apple now sells more handsets globally than Research in Motion and Sony-Ericsson (s sne) (s eric).

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Kevin, don’t forget Windows Phone 7 is using Qualcomm Snapdragon exclusively for now. Depending on when/if the Verizon iPhone debuts the volume may be comparable.


This article makes the point of its title very minutely and almost unnecesarily when you factor emerging technologies launching and soon replacing anything Qualcomm seems to have a grip upon within the next 10 years. Qualcomm will experience a very short-lived victory if it does not either acquire current LTE tech or develop a competitive LTE solution to those already being prepared for deployment by Verizon and AT&T. LTE is still very much a data-centric policy. Qualcomm needs to capitalize on maximizing merging data and voice into an LTE solution that can be deployed on a massive scale. This articles focuses on the very important here and now, but how does that benefit Qualcomm any more. Most new iPhone 4 owners on CDMA carriers will be CDMA users, especially when you consider that those carriers WILL be choked by the increased demand in data throughput. GSM users will leave Apple for Verizon, especially, since the cost benefit isn’t advantageous enough. Sprint is the most expensive CDMA carrier. Apple is the most expensive GSM carrier. The balance is already built in the user base. I don’t see a great shift in new users to the CDMA networks, especially Sprint, which is already languishing in its decision to go WiMax when WiMax 2 is very slowly being tested abroad, and not by Clearwire, which is commiserating with LTE in trials to go dual mode, further diluting Qualcomm’s impact. A CDMA iPhone 4 will consume mostly existing CDMA users on either Sprint or Verizon who did not want to go to AT&T because of its over-taxed network. AT&T’s network may benefit by seeing some users depart, relieving the pressure on its data throughput, but it’s already swimming in cash that can be used for upgrading its existing 3G backbone for its future LTE implementation, which may take a backseat to HSPA+.


How is Sprint the most expensive CDMA carrier? I thought Verizon owned that crown.

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