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  1. 1. Group Selected Case Analysis QUALCOMM: LEADING THE WIRELESS REVOLUTION Electronic Commerce Management 671 Radford University Spring 2001 Elizabeth Curl Karl Zartarian Mike Biscotte
  2. 2. Group Selected Case Analysis QUALCOMM: LEADING THE WIRELESS REVOLUTION Contents Page I. Introduction II. Description of the Company III. Description of the Industry IV. Description of Third Generation Wireless V. Analysis of Porter’s Five Forces VI. STEEP and SWOT Analysis VII. Business Model VIII. Target Markets IX. Company Core Competencies X. Company and Industry Financial Information XI. Key Company Challenges XII. Problem Statement XIII. Strategies and Recommended Actions XIV. Summary XV. References
  3. 3. I. INTRODUCTION There is a revolution in the world of communications and information transfer today, and this revolution is wireless. The Internet has affected the way people work, play, and communicate. Shopping, research, and messaging are all popular uses of PC-based internet applications. The internet has streamlined business, personal, and financial transactions, and provides a cost-effective method of communications. Cellular phones have also affected the way people communicate. Cellular usage has exploded as society has embraced the ability to talk with each other any time in any place. Safety and convenience issues have become significant drivers in its rise in popularity. The next generation of wireless devices, however, will merge these two functionalities. Consumers desire access to internet-based activities from their wireless handsets. Businesses want to perform all manner of transactions in a mobile manner. Consequently, the companies that can support and standardize the required wireless equipment and technology will prosper. QUALCOMM is such a company. QUALCOMM’s patented technologies form the basis for the global wireless platforms. Their significant research and development activities have allowed them to stay at the forefront of wireless technology, and their broad patent base provides a significant revenue stream. QUALCOMM, however, faces challenges from several fronts if they are to retain their industry leadership position. These challenges come from other chip manufacturers, alternate wireless standards, and government-sponsored communications systems. This case analysis will document QUALCOMM’s present situation, investigate the overall industry, discuss the challenges QUALCOMM faces, and provide recommended actions for the future. 3
  4. 4. II. DESCRIPTION OF THE COMPANY QUALCOMM, Inc. is engaged in developing and delivering digital wireless communications products and services based on a digital technology called Code Division Multiple Access (CDMA). CDMA is a method of transmitting information securely over radio frequencies. QUALCOMM owns several patents, which are essential to the core of their business worldwide, supporting various aspects of CDMA technology. QUALCOMM was founded by Professor Irwin Jacobs and Professor Andrew Viterbi in 1985. Their vision was to create a company focused on ‘Quality Communication’ for the public sector, hence the name ‘QUALCOMM’. QUALCOMM’s first headquarters was in an office located above a pizza parlor in San Diego, California. Professors Jacobs and Viterbi began research and development on adapting CDMA, a secure wireless transmission technology that was developed for the military during World War II, for commercial use. QUALCOMM was incorporated in 1985 and by 1989 they had proposed CDMA technology to the wireless industry. QUALCOMM currently has over 400 U.S. patents and over 900 U.S. patents pending related to CDMA technology. Approximately 12 percent of the 550 million consumers who utilize first and second generation wireless technology employ networks that are based on QUALCOMM’s CDMA technology. QUALCOMM’s major emphasis is the global implementation of their standard, cdma2000, for third generation wireless. QUALCOMM, Inc. is divided into several business units, including QUALCOMM Technology License (QTL), QUALCOMM CDMA Technologies (QCT), and QUALCOMM Wireless Systems (QWS). QUALCOMM Technology Licenses (QTL) generates fees and royalties from manufacturers’ use of CDMA technologies. The company has licensed its CDMA patent portfolios to more than 90 telecommunications equipment manufacturers. QUALCOMM CDMA Technologies (QCT) is the world’s leading developer of CDMA integrated circuits, system software, and tools for wireless device and network infrastructure equipment manufacturers. QCT has shipped more than 350 million CDMA integrated circuits worldwide. QCT now manufactures circuits featuring wireless position location technology through its subsidiary, SnapTrack. QCT generates revenue from the sale of CDMA-based products. QUALCOMM Wireless Systems (QWS) provides mobile communications and logistics management systems and services to the transportation industry through its OmniTRACS systems. QWS also develops and manufactures gateways and devices for the Globalstar system, an advanced satellite network offering continuous mobile voice and data services. 4
  5. 5. QUALCOMM has several other ventures, including a project with Technicolor® Inc. to develop a digital delivery system for the distribution of movies, and the Eudora email program which they have developed and marketed. QUALCOMM employs over 6,000 people worldwide, with headquarters in San Diego. Their stock is traded on the NASDAQ under the symbol QCOM and their website can be viewed at www.QUALCOMM.com. A list of their executive officers is shown in Figure 1. FIGURE 1 – QUALCOMM EXECUTIVE OFFICERS Name Executive Office Irwin Jacobs Chairman of the Board and Co-Founder Richard Sulpizio President Anthony S. Thornley EVP and Chief Financial Officer Steven R. Altman EVP Franklin P. Antonio EVP and Co-Founder Paul E. Jacobs EVP 5
  6. 6. III. DESCRIPTION OF THE INDUSTRY The wireless telecommunications industry is poised for intensive growth over the next few years. The International Data Corporation (IDC) estimates that from 1998 to 2000 wireless users worldwide increased from 303.5 million to 550 million. The IDC also estimates that the number of wireless customers will increase to over 1.1 billion users by the year 2003. The wireless telecommunications industry is a dynamic system that involves the complex interaction of a large number of groups including international and national standard-making bodies, national governments, wireless network providers, and hardware manufacturers. The wireless telecommunications industry consists of multiple mobile networks including the Internet, GSM-MAP, and ANSI-41. All of these networks operate within different radio frequency bands with different access modes such as CDMA, GSM, PDC, and TDMA. Key measures of wireless technology are peak data rate, voice quality and spectral efficiency/capacity, roaming, and mobility. Spectral efficiency/capacity is a measure of how efficient a particular technology (for example, GSM, CDMA, or TDMA) utilizes government authorized radio spectrum for public communication. Currently, there are three generations of wireless technology, referred to as first or 1G, second or 2G, and third or 3G. The key measures steadily improve with each successive generation. Each of the national governments, network providers, and hardware manufacturers champion their own standard and access mode. This favoritism has resulted in a host of regional networks that are generally found within national borders. While the average wireless user can roam anywhere that a GSM network (the predominant network in Europe and Japan) is in place, the technology is limited in quality, peak data rate, and spectrum efficiency. The wide variety of networks, standards and access modes located regionally prohibits the average consumer from using their personal wireless system globally. Currently, first and second generation wireless technologies are the predominant technologies worldwide. However, with the increasing reliance of consumers and businesses on the Internet, e-commerce transactions, streaming media, and video conferencing (applications that require high data rates, improved quality, and excellent spectrum efficiency) these first and second generation technologies are rapidly becoming inadequate. The industry, and QUALCOMM in particular, is making a concerted effort to develop multi-mode, multi-band and multi-network devices that will allow seamless worldwide roaming. 6
  7. 7. I. DESCRIPTON OF THIRD GENERATION WIRELESS The International Telecommunications Union (ITU) has adopted one global standard based on CDMA technology. That standard, however, emphasizes two major options for the third generation wireless service. Those options are WCDMA and cdma2000. While WCDMA (“wideband” CDMA) is based on CDMA technology, it is a generic standard that was produced by a variety of standard-making bodies and several companies. However, cdma2000 is exclusive to QUALCOMM and is patented by them in every respect. The battle between WCDMA and cdma2000 is an instance where QUALCOMM’s customers are also their competitors. Wireless operators that implement the WCDMA standard do not pay royalties or licensing fees to any company since the standard is generic. However, the manufacturers of the chips used in the WCDMA equipment are required to pay licensing fees and royalties for those aspects of CDMA technology that are used that QUALCOMM has patent rights to. Separately, wireless operators that implement the cdma2000 are required to pay fees and royalties to QUALCOMM for using their standard. QUALCOMM earns revenue from the cdma2000 chip manufacturers as well. Therefore, although QUALCOMM’s strategy is to implement cdma2000 technology worldwide and they are competing head-to-head with WCDMA, they continue to generate revenue from WCDMA users. 7
  8. 8. V. ANALYSIS OF PORTER’S FIVE FORCES Porter’s five forces are used to analyze QUALCOMM relative to its industry. This analysis includes QUALCOMM’s suppliers, buyers, and rivals, and any new market entrants and substitutes. A. Suppliers QUALCOMM depends on third parties for manufacturing, assembling and testing of their integrated circuits. Most of these suppliers are sole source vendors and they are used in the start-up phase of a product life cycle. This is risky for QUALCOMM, because should any of these suppliers ally themselves with QUALCOMM’s industry rivals, it could delay product development and hinder sales revenue. In addition, should any of these suppliers allocate capacity to other products, it could hinder QUALCOMM’s product development. Much of QUALCOMM’s intellectual capital is developed by their own technical personnel. Should they lose any of these qualified personnel to industry rivals, it could cause them to lose their intellectual property. Designers of CDMA integrated circuits, as well as companies that promote non-CDMA technologies, include Ericsson, Intel, LSI Logic, Lucent, Motorola, Nokia, Nortel, Philips, Samsung and Siemens. All of these competitors are also licensees of QUALCOMM. These suppliers are also buyers, but could harm QUALCOMM’s product development if they were to align themselves with other network providers. These suppliers can also obtain licenses from QUALCOMM to manufacture CDMA integrated circuits that compete directly with QUALCOMM products. Satellite systems providers are necessary for QUALCOMM’s success with OmniTRACS, Truckmail, and Omniexpress. Transponder capacity is critical for these systems to be successful. If the capacity were not adequate, it would harm their business and operations of these systems. Satellite systems could also affect the Globalstar product. Globalstar is a satellite based wireless telephone. If the satellite network should lose capacity or change, it would have adverse affects to their revenues. B. Buyers QUALCOMM has buyers in the transportation, entertainment, and communication industries. Some of QUALCOMM’s buyers in the communication industry could pose competitive problems. A high percentage of QCT’s revenue, 39%, is generated from agreements with Samsung Electronics, LG Information, and Hyundai Electronics of Korea. QUALCOMM needs to expand their customer base since the loss of one or more of these customers would pose a significant loss of revenues and could affect QUALCOMM’s profitability. 8
  9. 9. C. Industry Rivals QUALCOMM may be threatened by existing rivals who have more established relationships and distribution channels. These rivals could also form alliances among themselves or existing customers, which could affect buyers’ decisions to purchase products or license technology from QUALCOMM. This could also cause new competitors or alliances among competitors to emerge, causing QUALCOMM to lose market share. D. New Entrants New entrants might consist of competitors offering low cost terrestrial- based products, in addition to future satellite-based systems, may intensify competition in new markets and impact margins. Telephone companies can pose threats as new entrants into the market. If they enter with newer technology for 3G networks, this could impact QUALCOMM growth. An independent military contractor could emerge as a new entrant into the market with a radically different technology. E. Substitutes New satellite systems could be a substitute for CDMA. Also, new GSM technology for 3G networks could replace CDMA altogether. Another substitute threat is WCDMA for the European network system. Lastly, new land-based technology as substitute for CDMA or a different form of wireless could pose a substitute threat to QUALCOMM’s technologies. 9
  10. 10. VI. STEEP AND SWOT ANALYSIS A situational, technological, environmental, economic, and political (STEEP) analysis and a strengths, weaknesses, opportunities, and threats (SWOT) analysis were performed in order to to better understand QUALCOMM’s potential for future success. A. The STEEP analysis reveals the following: 1. Situation – Wireless communication and technology is in its early product life cycle stage. Many new forms of technology could form over the next decade and new companies and alliances may form as the industry matures. Satellite communication is evolving and may prove to be a viable alternative to land-based wireless technology. 2. Technology – In the early stages. New technology is rapidly emerging and QUALCOMM needs to maintain an intellectual advantage in order to meet their financial goals. 3. Economic – The current economic situation is uncertain. In fiscal year 2000, QUALCOMM depended on 47% of its revenue from international customers. A faltering overseas economy will adversely affect their revenue and profits. Additionally their revenue will be adversely affected if consumer spending in the United States continues to stagnate. 4. Political – As noted above, with 47% of revenue dependent on international customers, should the political environment change in Korea or China, QUALCOMM will also be directly affected. Also, political situations in Europe may play a part in QUALCOMM’s success of entering the European market. B. The SWOT analysis reveals the following: 1. QUALCOMM’s Strengths: a. CDMA technology has a high adoption rate in the North American market. b. Their patent protection ability is a key competence as they aggressively protect their intellectual property. c. QUALCOMM is financially sound with stable earnings, profitability, and growth providing them with necessary resources for continued expansion in research and development. 10
  11. 11. 2. Competitors’ Strengths: a. Existing royalty-free, cross-licenses for competing and emerging technologies. b. Longer operating histories and established presence in key markets. c. Greater brand recognition. d. Access to larger customer bases. e. Greater financial, sales, marketing, manufacturing, distribution, and technical resources. 3. QUALCOMM’s Weaknesses: a. Loss of any major customer. Of the QCT business segment, 39% of their revenue is a result of three customers in Korea. Sales to Globalstar accounted for 30% of revenue of the QWS business segment. b. Dependence on a limited number of third party manufacturers to produce and test products. As explained in Porter’s five forces, any disruptions in the operations of these third parties could harm delivery obligations. c. QUALCOMM provides financing for CDMA networks to their licensees. If these customers default on their loans, QUALCOMM’s financial position could be harmed. d. Globalstar has high infrastructure costs, which could adversely affect the growth and market acceptance of their product and directly affect QUALCOMM’s revenue and profitability. e. QUALCOMM has poor overseas sales channels, specifically in Europe. They also spend exhaustive amounts of money in legal proceedings for patent protection. 4. Competitors’ Weaknesses: a. The competitor’s network technology mainly focuses on GSM technology. If they do not emerge with newer technology to meet 3G networks it could limit their growth. b. Competitors have limited North American market share. 5. QUALCOMM’s Opportunities: 11
  12. 12. a. Industry need for third generation wireless communication. b. Emerging markets in Asia, specifically China and India. These two markets have a population of approximately 2.2 billion people combined, or 40% of the world population. c. Spinco will help to make their licenses ubiquitous. d. CDMA adoption will generate significant revenue growth. 6. Competitors’ Opportunities: a. Industry need for third generation wireless communication. b. Emerging markets in Asia, specifically China and India. These two markets have a population of approximately 2.2 billion people combined, or 40% of the world population. c. Adoption of alternative standards may open the door for new products. 7. Common threats for both QUALCOMM and its competitors: a. Rapid technology change could make existing products obsolete. b. Poor execution of new product deployment could affect market share and revenues. c. Poor financial health of major customers will adversely affect earnings and profitability. d. International instability and foreign exchange fluctuation may hinder growth and revenues. e. Acceptance of technology for third generation networks. f. Health risks. There have been many white papers published in the medical field debating whether radio frequency emissions from wireless handsets may be linked to various health concerns, including cancer. This could discourage users of this product, thus affecting sales of technology licensing. 12
  13. 13. VII. BUSINESS MODEL QUALCOMM’s basic business model is centered on their innovative and creative abilities. QUALCOMM invests heavily in research and development with a focus on creating new products and services. In 2000, they invested 23% of revenues in research and development. They patent their new ideas and use the ideas to create new products and services. QUALCOMM generates revenue through licensing fees and sales. A diagram of QUALCOMM’s basic business model is shown in Figure 2. FIGURE 2 – QUALCOMM’s BUSINESS MODEL Research and Development Invest in Intellectual Capital Patent New Technologies New Products and Services - manufacturing - acquisitions - partnerships Revenue Stream - Sales - Licensing Fees - Royalties 13
  14. 14. QUALCOMM refers to its specific business model as the “Virtuous Cycle”. The “Virtuous Cycle” centers on the development, implementation, and application of their CDMA technology. QUALCOMM’s business strategy is to innovate new technologies with large market potential to significantly increase wireless traffic. Increased wireless traffic translates to an increased need for high data rate and efficient technology, an increased subscriber base, and increased revenue. QUALCOMM’s objective is to meet this market need using the benefits of CDMA. The key to the QUALCOMM business model or “Virtuous Cycle” is their emphasis on technology patents. QUALCOMM develops ideas based on CDMA, patents those ideas, then develops CDMA-based applications designed to increase wireless usage by increasing usage per subscriber and the number of subscribers. They promote CDMA technologies and products by licensing CDMA patents to manufacturers and by making necessary partnerships, acquisitions, and start-ups to enable CDMA product and service advancement worldwide. All of QUALCOMM’s revenues are generated through the licensing fees, royalties and product sales based on CDMA. 14
  15. 15. VIII. TARGET MARKETS QUALCOMM is a major part of the wireless telecommunications and application industry and targets all the buyers that comprise that market. QUALCOMM also targets other industries that are served by the wireless telecommunication’s industry such as the satellite, transportation, and entertainment industries. They also provide services to the U.S. Government. QCT targets all consumers along the wireless telecommunication value chain. Those consumers include wireless network providers and hardware manufacturers including network infrastructure, chip (or integrated circuit), handset (or phone), laptop, hand-held computer, and other mobile devices. QCT provides products to over 30 handset manufacturers. They also provide complete system solutions for wireless networks. First, they provide products that allow manufacturers to design very small, feature-rich handsets. Second, they provide network infrastructure manufacturers integrated circuits and system software so that network infrastructure manufacturers can provide standards- compliant processing for wireless voice and data. QUALCOMM targets satellite industries that are serviced by wireless telecommunications. QUALCOMM, in partnership with Loral Space and Communications, created Globalstar in order to promote and develop CDMA based technology in the wireless telecommunications industry that is enabled by satellites. Wireless Systems, another division of QUALCOMM, targets the satellite industry by designing, developing, manufacturing and deploying the infrastructure, handset products and modems for use in Globalstar’s CDMA based networks. QUALCOMM targets the transportation industry with products that enable position location, tracking technology, and intensive data transmission to various commercial fleets and automobile manufacturers. Examples of their current customers are the Ryder truck fleet and Ford Motor Company. Two other target markets for QUALCOMM are the entertainment industry and the U.S. Government. First, in the entertainment industry, QUALCOMM has partnered with Technicolor® to provide end-to-end digital cinema systems for delivering motion pictures to theaters worldwide. Secondly, QUALCOMM performs a variety of work for various departments and agencies of the U.S. Government involving commercial related technologies. 15
  16. 16. X. COMPANY CORE COMPETENCIES QUALCOMM’s success has been based on several core competencies. These core competencies have allowed QUALCOMM to become a market leader in the industry, and are described below. A. Research and Development (R&D) Since its inception, QUALCOMM has been committed to R&D. From its first commercial program, the OmniTRACS mobile communications system, to its latest alliances, QUALCOMM has always strived for innovation. A major part of QUALCOMM’s business model is based on developing innovative products and services, then licensing these products and services across a large number of users. B. Patent Defense In order to protect the advantages of their R&D efforts, QUALCOMM has, by necessity, developed and maintained a very aggressive and effective stance toward defense of its patents. They maintain a large staff of in- house patent lawyers to protect their patented products and technologies. C. Startups/Spinoffs As another outgrowth of its R&D efforts, QUALCOMM has become very effective at developing internal, or identifying external, innovative companies for startup or spinoff opportunities. In fact, QUALCOMM has set up QUALCOMM Ventures as a separate subsidiary to fund potential startups. D. Visionary Management Tying these qualities together is the overall vision of QUALCOMM’s management. QUALCOMM’s goal is to grow the CDMA markets worldwide. By supporting and fostering new and innovative companies and products which advance CDMA technologies, QUALCOMM helps support the “Virtuous Cycle”. 16
  17. 17. XI. COMPANY AND INDUSTRY FINANCIAL INFORMATION QUALCOMM’s patent-intensive focus is a unique business model within the wireless telecommunications industry. No other wireless telecommunications company has the same single-minded focus on the promotion of one technology nor does any other company have a viable technology that competes directly with CDMA. QUALCOMM is also unique in that all of the global standards that the International Telecommunications Union, which is the international standard- making body, has adopted are based on CDMA technology. Even though QUALCOMM does not compete head-to-head with any companies with a similar model, they do, however, compete with several companies operating in specific aspects of the telecommunications industry. Since QUALCOMM’s major thrust is the global implementation of cdma2000, their major competitors are network providers that promote the adoption of WCDMA based networks. Alcatel, a wireless network provider based in France, is a major competitor with QUALCOMM in this area, along with Ericsson. Some of QUALCOMM’s competitors are also their customers. For instance, QUALCOMM licenses CDMA technology to several chip manufacturers that make chips for CDMA-based handsets. Some examples of chip manufacturing customers are Texas Instruments and National Semiconductor. However, QUALCOMM’s own QCT division manufactures chips to sell to handset manufacturers as well. QCT competes directly with Texas Instruments and National Semiconductor. QUALCOMM’s intention to spin-off the QCT division with the creation of Spinco, however, is meant to minimize competition with other chip manufacturers and facilitate access to the patents for other standards. Figure 3 provides basic financial information on QUALCOMM and some of their major competitors. QUALCOMM had $3.2 billion in revenues in 2000. Approximately 39%%, 22%, 22% and 17% of the revenue stream (Figure 4) was generated by the QCT, QWS, QTL divisions and other income, respectively. QUALCOMM has a price-to-earnings ratio of 364.6, which is significantly higher than any of their competitors. They also paid off their debt in 2000, which generated a much higher than average current ratio. QUALCOMM’s Profit Margin and Return- on- Assets are lower than the average for the S&P 500. 17
  18. 18. FIGURE 3 – FINANCIAL INFORMATION Co. Industry Sales Current Profit (Billions) Ratio P/E ROA Margin QCOM Standards 3.9 5.72 4.91 364.6 2.3 Chip Manu. ALA Network 28.2 1.7 4.8 31.1 3.3 NSM Chip Manu. 2.31 2.55 19.2 10.3 18.2 TXN Chip Manu. 11.9 2.88 26.0 18.3 17.4 AWE Network 9.6 2.0 -2.1 NA -0.68 ERICY Handset Manu 29.5 1.3 6.9 22.4 9.4 Chip Manu. S&P 500 Index - 1.61 12.36 28.1 8.81 •QCOM - QUALCOMM TXN - Texas Instruments ALA - Alcatel •ERICY - Ericsson NSM - National Semiconductor AWE - AT&T Wireless FIGURE 4 - REVENUES Total $3,197M 39% QCT (CDMA) 17% $1,239 $532 QWS (Wireless Systems) QCT (Licensing) Other (Eudora, Digital $705 Cinema) $721 22% 22% 18
  19. 19. XI. KEY COMPANY CHALLENGES QUALCOMM faces a number of significant challenges, including asserting cdma2000 as the dominant worldwide standard, maintaining competitive advantage in developing new technologies, and continuing to manage their growth. First and foremost is the struggle for a dominant worldwide wireless standard. The market has not yet determined which standard they will ultimately choose. Currently the choices are cdma2000 or WCDMA. QUALCOMM’s ultimate business focus is to ensure that cdma2000 is the dominant standard. However, even though third generation wireless is in the early stages of implementation, the industry appears to be choosing WCDMA, particularly in cases of newly issued spectrum. The industry seems to prefer cdma2000 when implementing third generation wireless in pre-existing spectrum. QUALCOMM’s management recently commented on reasons why industry is looking to WCDMA and offered counterpoints as to why cdma2000 is the better alternative: Industry: WCDMA offers a natural path for GSM subscribers. QUALCOMM: cdma2000 requires one chip; no new spectrum; no further development or testing of networks like WCDMA Industry: WCDMA time to market is advantageous to cdma2000 QUALCOMM: cdma2000 development process is further along; WCDMA standard has not even been finalized Industry: WCDMA favors economies of scale due to dominant market share QUALCOMM: Cost per megabit much less than WCDMA; All new cdma2000 handsets will be have backward compatibility; WCDMA will not Industry: Int’l roaming with WCDMA easier due to dominant global standard QUALCOMM: Introduced MSM6xxx chips compatible with cdma2000 and GSM Industry: WCDMA has better performance QUALCOMM: cdma2000 beats WCDMA based on data rates 19
  20. 20. Also, risks exist relative to QUALCOMM’s capability in developing and introducing new products and services in a timely manner. QUALCOMM’s historic advantage has been its ability to develop new technologies. However, this can be a very difficult talent and skill to consistently display. If QUALCOMM cannot maintain its entrepreneurial mentality towards new products, its ability to develop new products and subsequently collect royalties will be significantly diminished. QUALCOMM must also carefully manage its growth and smoothly assimilate its various acquisitions, mergers, and spinoffs. QUALCOMM has experienced significant growth, and plans to continue this expansion. This growth requires significant management, particularly at the middle levels, to ensure consistency of product and application. If this growth is not properly managed, QUALCOMM will suffer myriad operational issues. Lastly, QUALCOMM will be operating in an extremely competitive business environment. For all the reasons that the future might be bright for QUALCOMM, it might be equally bright for others in the wireless industry. QUALCOMM’s advances will be hotly contested at every turn, and it will require significant effort and resolve by QUALCOMM to overcome this competition. 20
  21. 21. XII. PROBLEM STATEMENT The overarching basic problem statement for QUALCOMM’s future is as follows: “How will QUALCOMM establish cdma2000 in the global market for third generation wireless communications?” 21