Is WiMAX dead? A piece of market commentary
Kiriako Vergos, Managing Director
22 January 2009
Over the last five years I have found the need every now and then (with decreasing frequency I must confess) to write up a few comments on the state of the WiMAX/4G market as a means of responding to friends and colleagues who see Codium, rightly or wrongly, as a pioneer in this field and someone with ‘inside’ information at hand when… things get interesting. If this commentary is of no interest to you please let me know so that I can strike you off my list and of course please do keep in mind that as commentary the text below is nothing but a subjective opinion and not intended to be seen as a statement of ‘universal truth’:
Much has been read in the press lately that might indicate that the great WiMAX initiative is beginning to lose steam; prime examples are the following:
- Intel, TimeWarner & Comcast announce the write-off of their investment in the Clearwire-Sprint venture.
- Nokia has now ‘end of lifed’ the N810 terminal device (only Mobile WiMAX device launched so far by Nokia).
- 1st-tier vendors such as Nortel have pulled out of WiMAX while others such as Alcatel are rumored to be setting it aside for the sake of prioritizing LTE.
- The sworn enemy of WiMAX, Ericsson, with its double-barreled assault on the 4G pretender is claiming that on the one hand HSPA+ ,now ready for launch according to the Swedish vendor, being reinforced with QAM64 modulation and MIMO transmission schemes will bite huge chunks-out of WiMAX’s supposed performance advantage; on the other hand LTE development has been accelerated at break-neck speeds and will be ready in no time, blowing WiMAX totally out of the water.
How concerned should we be in the face of such news? Somewhat concerned, yes; wrapping-up the WiMAX show and plodding-off home, absolutely not.
Here are my responses to all the above:
- The investment write-offs already mentioned are more of a case of the aforementioned companies desperately trying to sanitize their balance sheets in the midst of huge capital markets upheavals rather than it being a message as to the merits of their investment as such.
- The N810 debacle was totally predictable. At a time when the vast majority of WiMAX terminal devices sold are produced by the same vendor who supplies the WiMAX network infrastructure, (i.e. the Base Stations) Nokia-Siemens inability so far to roll-out major Mobile WiMAX networks anywhere in the world has destined the N810 to commercial failure, (many would argue that in any case this was not Nokia’s objective; the vendor’s only reason to develop this device was to demonstrate to Sprint that they were mature enough as a WiMAX vendor to merit a significant stake in the operator’s US-wide infrastructure roll-out. Once this Sprint gambit failed, they argue, the device no longer enjoyed a ‘raison-d’être’.)
- We now understand that Nortel pulling out of WiMAX was merely one more measure to conserve cash by a near bankrupt entity (which now of course has definitively entered bankruptcy) given that the business unit concerned was still a long way from attaining meaningful cash-flows. The Alcatel story at first glance might be deemed of greater concern but one needs to remember that in spite of Alcatel’s ever increasing commercial success in the WiMAX market this 1st-tier vendor has taken far too long to position themselves in the LTE field, which after all, and irrespective of WiMAX’s ultimate commercial success or failure, will be the mainstream 4G technology for the majority of 1-tier operators.
- The news from Ericsson on HSPA+ and LTE, in my view, should be taken with the proverbial pinch of salt. Most legacy Ericsson operators are too mired in the current economic crisis for their shareholder’s to consider massive new deployments with HSPA+ until they have progressed considerably more in amortizing their UMTS/HSDPA/HSUPA networks. Furthermore, if Ericsson was so certain of LTE’s ability to take-off so soon why are they now spending so much money on developing and selling HSPA+ technology? Surely the amortization of both HSPA+ and LTE in the extraordinarily tight time-frame that Ericsson proposes is not going to be acceptable to most of their customers?
But let us now also look at some of the more positive news of the last few months:
The much-maligned Clearwire-Sprint venture is now offering service in two mid-tier US markets (Baltimore and Portland) with substantial commercial success and is expected to have reached several more such markets shortly.
Other massive Mobile WiMAX network roll-outs in Russia, India, Pakistan, Middle East and Asia have now successfully taken-off and are growing at an impressive rate.
The talk in the annual Las Vegas show last week has been on how impressed market watchers and consumers alike have been with the depth of Mobile WiMAX offerings, with Toshiba, Acer and Lenovo all announcing commercial launches of multiple laptop models with Mobile WiMAX embedded chipsets, thus adding to the already substantial list of dozens if not hundreds of terminal devices commercially available at this time.
All the above leads us to the conclusion that Mobile WiMAX is alive and well and continues on the road to becoming a successful 4G technology with a large market share (albeit significantly smaller in overall numbers to LTE) and with a still unchallenged and ever growing strength amongst the new “greenfield” 4G operators, due to the fact that LTE is neither viable as an alternative technology for them at this time, nor is it a truly imminent threat, as the new weapon of choice to be used against them by the existing 1-tier operators.
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