Qualcomm 2002 Annual Report Download - page 34

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TO OUR STOCKHOLDERS,
QUALCOMM HAS A HIGHLY FOCUSED
BUSINESS STRATEGY THAT HAS ENABLED
OUR COMPANY TO STRENGTHEN ITS
POSITION IN THE MARKETPLACE THIS
YEAR EVEN THOUGH THE TELECOM
SECTOR CONTINUED TO FEEL THE IMPACT
OF A STRUGGLING ECONOMY.
Dr. Irwin Mark Jacobs (left)
Chairman & CEO
Anthony S. Thornley (right)
President & COO
We are pleased with the substantial progress achieved this year in each of our
businesses. QUALCOMM has outperformed most communications technology
companies, largely because of the strong acceptance of CDMA2000 by CDMA
operators and their customers. We continue to lead the industry in the devel-
opment and delivery of digital wireless solutions based on CDMA, including
CDMA2000 and WCDMA, both based on the innovative technology we pioneered
over a decade ago. Based on results to date for operators in South Korea,
Japan, and North America, third-generation (3G) features are proving very pop-
ular with customers and enterprises, resulting in an increase in average revenue
per user (ARPU).
CDMA was first envisioned as a new way to make wireless voice calls more
efficient and reliable. It has rapidly evolved into a new way for people to learn,
play, navigate and work. Users are finding that their always-on wireless con-
nection to the Internet—supporting a growing number of applications and content
—makes life safer and easier, more productive and just plain fun. QUALCOMM
was first-to-market with the best high-speed wireless data solutions for enabling
these new services.
THE THIRD GENERATION IS HERE
3G CDMA technology is now in commercial operation with 32 operators in 16
countries. New systems are being installed in countries such as India and
Indonesia, and existing systems are being upgraded from second-generation
cdmaOne to third-generation CDMA2000 1X and 1xEV-DO.
A key reason for this rapid acceptance is the economic benefit that CDMA2000
provides to wireless carriers. They can upgrade their existing networks,
increasing voice and data capacity, coverage and quality with moderate expen-
ditures for infrastructure equipment. With chips and software supplied by
QUALCOMM, the upgrade for phones and infrastructure is relatively easy and
low-cost and is backwards-compatible, allowing subscribers to use both old
and new phones and to roam seamlessly among CDMA networks. With our
newest generation of chips and software, roaming will be extended to most
second- and third-generation networks, including GSM.
NEW NETWORKS
QUALCOMM has a highly focused business strategy that has enabled our
Company to strengthen its position in the marketplace this year even though
the telecom sector continued to feel the impact of a struggling economy.
Second-generation network rollouts were scaled back and subscriber growth
slowed down as many operators found it difficult to raise the capital they needed
to invest in new equipment for their networks. This was in stark contrast to
what is happening with QUALCOMM and CDMA technology.
The primary CDMA markets in South Korea, Japan and the Americas have per-
formed very well and we saw evidence of that this year with the launch of new
networks and the introduction of many new phone models and other devices
based on 3G CDMA technology. We also made substantial progress this year in
cementing relationships that will ensure continued growth for our Company
in many key new markets including China, India, Latin America, throughout
Asia, and hopefully, soon in Europe.