Qualcomm Personal Electronics has won significant handset contracts from Sprint Spectrum L.P. and PrimeCo Personal Communications L.P., with a combined value of $850 million.
The Sprint Spectrum agreement requires that Qualcomm begin shipping Code Division Multiple Access phones next month, a tall order for a new manufacturer that has been producing a novel product for less than a year.
“Based on current forecasts, this agreement is expected to give us the inventory we need to launch our service in the timeframe we have projected,” said Bernie Bianchino, chief business development officer for Sprint Spectrum.
Kansas City, Mo.-based Sprint is building a personal communications services network based on CDMA technology that will cover most of the nation’s major cities. Sprint hopes to have the system completed and turned on in selected markets-unnamed by the company-by the winter holidays.
Sprint’s three-year agreement with Qualcomm PE is valued at $500 million and calls for CDMA phones that operate at 1900 MHz. Bianchino said it is still in negotiations with other handset manufacturers.
This is Qualcomm’s first contract for PCS CDMA handsets in the United States; it supplied cellular CDMA handsets to AirTouch Communications Inc. for its network launch in May.
The PrimeCo agreement calls for two different CDMA phones, one that operates at 1900 MHz and one that operates at 800 MHz because PrimeCo is tied to CDMA networks at both frequencies. The bulk contract is valued at $350 million.
Dallas-based PrimeCo is building a CDMA PCS network in 11 major markets throughout the nation. In addition, PrimeCo is owned by three cellular companies, AirTouch Communications Inc., Bell Atlantic Nynex Mobile and U S West Inc.; the three are making joint purchasing agreements to leverage phone prices. Commercial shipments of the phones are scheduled to begin this year, and extend through 1998.
San Diego-based Qualcomm Personal Electronics is a joint venture between Qualcomm Inc. and Sony Electronics Inc. The two allied more than a year ago when Qualcomm became interested in manufacturing products using the CDMA technology for which it holds patents. Sony has the manufacturing and consumer electronics expertise; Qualcomm is pooling its knowledge of CDMA technology, a new wireless communication standard.
Through the co-development, Qualcomm PE is offering four phones. Two are labeled Qualcomm: the QCP-800 for cellular and the QCP-1900 for PCS. Two are labeled Sony: the CM-D500 for cellular and the CM-D600 for PCS. Each has “Digital by Qualcomm” imprinted near the pop-up earpiece.
The phones use a lithium ion battery. They have a five-line liquid crystal display with icons and a soft-key menu. Sprint said it has requested customized features that should be ready for the winter launch.
Sprint Spectrum will distribute the phones at the retail stores it is opening throughout the nation, as well as retail and electronics stores and direct sales channels.
Also, Sprint will distribute the PCS phones through its cable partners, which claim to collectively have 36 million customers. Sprint Spectrum is owned 40 percent by Sprint Corp., 30 percent by Tele-Communications Inc. and 15 percent each by Cox Enterprises Inc. and Comcast Corp.
Sprint Spectrum continues to negotiate with other handset manufacturers producing CDMA phones. At one time, Oki telecom was believed to be a strong candidate for a PrimeCo handset contract.
