Qualcomm (QCOM) investors are busy dancing in the streets, but an emerging set of rival wireless technologies threatens to dampen the festivities.

Having conquered nearly half the U.S. market and laid the groundwork for a repeat performance in China and India, Qualcomm has proven its many skeptics wrong. Its code division multiple access, or CDMA, wireless standard is sweeping the world in many forms, and it continues to win fans. Qualcomm's stock hit yet another two-year high Friday, rising $1.95 to close at $68.23.

But instead of uncorking the champagne, industry observers are watching a new generation of technologies that could derail the Qualcomm locomotive.

Competitors ranging from chip industry powerhouse Intel ( INTC) to closely held technology venture, Flarion, have been busy cooking up new systems that aim to deliver faster, cheaper mobile Net access. Industry analysts say these rival offerings, backed by deep-pocketed sponsors, could soon be eating away at Qualcomm's market dominance.

Max and Flash

For starters, Intel and telecom equipment giants like Alcatel ( ALA) and Siemens ( SI) have been pushing ahead with a wireless broadband standard called 802.16e. This technology, more affectionately known as WiMax, picks up where WiFi left off, enabling laptop users to keep a fast connection while traveling. The link could also serve as a phone connection for voice-over-Internet-protocol, or VoIP, calls.

"The fact that Intel is involved with WiMax is not insignificant," says Nitin Shah, broadband wireless analyst with tech research and strategy shop RHK.

Shah says the wireless industry is ripe for yet another phase of network investment. "All it takes is the right combination of spectrum, standards and scale," says Shah, adding that standardization of WiMax might be the "tipping point," since it would open the market to competing suppliers operating on a common platform.

Another technology that has caught the industry's imagination is flash-orthogonal frequency division multiplexing, or Flash-OFDM. The idea was spawned in Lucent's ( LU) Bell Labs and spun off in a separate business called Flarion, based in Bedminster, N.J.

Flarion, which has investments from Lucent and Cisco ( CSCO) among others, was recently chosen by Nextel ( NXTL) on a trial basis to test its fast mobile Internet connections in Raleigh, N.C. Notably, networking gearmaker Nortel ( NT) is helping with the installation and management of the Flarion equipment for the trial.

While it's obviously too early to pick any winners, the long-range concerns coupled with more immediate doubts have some Qualcomm bulls starting to fear the company may be peaking.

Spin Cycle

Reports last week of grumblings about steep royalty rates in South Korea helped renew concerns that Qualcomm's golden revenue stream may not go unchallenged forever. And even otherwise good news contained some ominous signs. There were reports late last month that demand for some of Qualcomm's chips has outpaced supply, which was interpreted in some circles as one of those top-of-the-cycle signs.

On Thursday, Bank of America analyst Tim Long cut his Qualcomm rating to neutral. He cited, among other reasons, the growing popularity of enhanced data rates for global evolution, or EDGE, upgrades in Europe. Those allow stingy telcos to delay more costly investments in the 3G networking gear known as WCDMA.

But owning patents to the fastest-growing wireless standard in the world gives Qualcomm a considerable safety margin. In fact, the company's massive shift -- from upstart proponent of the "other way" to heir apparent to the "only way " -- has been remarkable.

After years of lobbying and virtual arm twisting, Qualcomm has been able to convince nearly every wireless telco that some variant of CDMA will be incorporated into 3G wireless upgrades. Still, as cellphones morph slowly into mini computers, the gear war doesn't end with 3G.

Qualcomm has offered a fast data product called evolution data only, or EV-DO, which Verizon Wireless is using to outfit its network for Internet users. That's a key victory, because Verizon is the nation's largest cell-phone service.

But industry observers point out that EV-DO has some faults. To handle data, EV-DO must rob the network of valuable voice capacity. And the service is expensive to boot.

RHK's Shah estimates that EV-DO costs users between $1 and $3 for every megabit of information they receive or send. That compares with the 5 cents users are accustomed to paying with their in-home broadband connections.

Flarion's solution, according to Nextel, would cost considerably less.

Though Flarion is a closely held company, that hasn't stopped some Wall Street analysts from projecting the impact Flash-OFDM could have on equipment spending.

Deutsche Bank analysts predict that of all the emerging fast mobile data technologies, Flarion's Flash addresses the largest market opportunity. By Deutsche Bank estimates, as much as $2.9 billion could be spent on Flash-OFDM gear over the next five years. That edges out Qualcomm's EV-DO, which could attract as much as $2.7 billion in spending. Deutsche Bank has done underwriting for Qualcomm, and has no banking ties to Flarion.

So there's still ample reason for Qualcomm investors to celebrate -- but they may not have exclusive rights to the VIP room.

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