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TWST: Let’s start off with what’s been going on most recently. Who are the major players and what’s the situation as it stands right now?

Mr. Brau: The big news is the Ericsson (ERI.MI) second quarter. You’ve got four large telecommunications equipment plays plus you have Siemens (723610.FX), which is a conglomerate but has a major telecommunications equipment company in there, and they’re active in a lot of different areas. Lots of stuff is going on in wireless; it’s going on in optical and it’s going on in ATM and IP.

TWST: What have been the biggest implications of Ericsson’s announcements?

Mr. Brau: It used to be that there were three leading mobile phone suppliers all with, I won’t say totally comparable positions, but they were all competitive with each other and now, essentially, you have Nokia (870737.FX) way out in the lead, Motorola a distant second, and Ericsson an even more distant third. I think that’s what the Ericsson second quarter more or less confirmed, that it’s not going to ever make it in mobile phones.

TWST: What do you see as being the #1 development that will spark change or instigate some kind of movement within this sector over the next six to twelve months, be it technological or financial?

Mr. Brau: I would way, well, six to twelve months --

TWST: Do we need to look further than that?

Mr. Brau: Yes. I think the main shift is going to be the buildout of the 3G networks and who wins all the contracts. In six to twelve months, we’ll have a good idea of how the different companies are doing in terms of announced contracts. I don’t think it will come as a huge surprise. Ericsson will be #1, Nokia will be #2, but that will be confirmation. That will probably be the biggest impact on the mobile infrastructure side and the handset side. People are waiting for wireless data and WAP to really take off. There’s been a huge amount of hype. Now there’s backlash and, then, the question is: what’s going to turn that around? So people are saying, well, once GPRS phones are available, this is the always-on technology, you’ll see wireless data take off. I think that’s going to be very important, because if it doesn’t take off, then all the forecasts made for 3G networks will have to be revisited. So I think that it will be very important to see how all of these mobile Internet applications work when you finally have phones that are user friendly, as opposed to the current phones, which end up being kind of unwieldy and not a good way to access the Internet.

TWST: When Nokia puts out their release on Friday, do you look at them to extend this position? If they’re the leading player right now, have they developed a business strategy and ways to implement it that are going to keep them out in front?

Mr. Brau: They’ve been increasing market share, I think, continuously since 1994 with the exception of one year, and they essentially are in a situation where the bigger they get, the more powerful they are and the more market share they’re able to take. So I do see them increasing their market share this year. Although Ericsson says it’s not going to lose market share this year, it will. Motorola will probably maintain it’s market share this year, although it’s doing so by selling a lot more low-end, entry-level phones, which is not really where the profitability is. So if you’re looking at the profitable segments of the market above the entry level, Nokia is now totally dominating that. It’s not to say that other companies don’t have products in the upper range, it’s just that Nokia is making by far the bulk of the profits in the industry and everyone else is scrambling to make profit in the low end. If Nokia has 24% operating margin and then the next highest operating margin in the industry is 5%, it just shows you how dominant they are.