economics of strategic behavior 3: Qcomm 2004

Case: Qualcomm, Inc. 2004

-       What are the Competitive Advantages HiTech Co. could enjoy?

-       How far are these advantages sustainable?

Qualcomm’s divisions:

1.      Chip Set.  80% market share.  Advantage independent to licensing. May be good to explore.

2.      Licensing.

a.  CDMA.  Patents as proprietary tech are expiring.  Has “learning” in CDMA and Economics-of-Scales in CDMA.  While moving to next generation of digital information tech (WiFi?), will licensee be inclined to wait for Qcomm tech?

b.  WiFi, other G4 tech.  No advantages obtained so far.

3.      Brew.  (application environment). No economics-of-scale; nor proprietary tech; limited customer captivity (30 of 1500+) – not selling directly.

Strategic Priority:

1.         Explore sustainable advantage: Chips; Licensing in areas of CDMA and related Tech.

2.         Level Play Fields. Think about how to attack.

a.  G4

b.  WiFi, WiMax, etc.

Greenwald’s warnings:

1.        Don’t dive into R&D/Tech in favor of guessing the winning tech!  Anytime when you decide to forget comp. advantages and dive into guessing winning tech, remember you are warned in this room!

2.        Somebody is doing this and they are growing promptly.  That is a good idea?  How about Enron when it grew quickly?  AT&T? MCI?  You can’t stop right before the stock down.  And you don’t.  And you don’t!

3.        A lot of students told story about making enough money since I started teaching.  From 5 million to 10 to 25 … till 500 million, they are still working!  And you too!