Padgett

Questions

1. GSM was an already established form of digital communication; Qualcomm introduced CDMA late in the wireless game. Many users had already become loyal to GSM.

The European Union backed GSM as the standard for digital communication and since Europe led the world in wireless phone technology. European companies such as Ericsson and Nokia were major suppliers of GSM it benefited them.

The economic extent is that GSM had economies of scale, since more GSM handsets were sold than the CDMA handsets the GSM handsets were actually less expensive than CDMA. Breaking into this market with equipment that is more expensive is very difficult.

The economic and political factors are not independent. One feeds off of the other. The European Union backed GSM, therefore major companies in Europe used GSM, which means there was more exposure for the product, and this in turn produces sales.

2. The case does not say whether Qualcomm did its homework with regard to the systems already in place and the role the government played in those businesses. Qualcomm should have found an "in" with someone who knows someone. China likes to work on relationships and in my opinion maybe the deal would have happened sooner if there was an established relationship first.

I believe in other nations it could be this difficult, every business needs to dig deeper into the business ties with the government and research the culture and how and why they chose to do business with a foreign corporation. Every nation has its own way of doing business and foreign companies really need to find out what that way is before wasting time trying to get it.

3. China will be very important to Qualcomm future due to the sizable population and market penetration. As the case stated forecasts are predicting that by 2009 there will be 550 million wireless subscribers in China.

I think for Qualcomm to give China the lower royalty rate is a good business move in order to get the business. This would also depend on how long that royalty rate stands in the contract, at the expiration