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WiMAX a crucial piece for vendor success
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Things aren't looking too great for the industry's vendors. Last week Ericsson issued an unexpected profit warning that sent the vendor's share price tumbling nearly 30 percent. Ericsson cut its guidance for the third quarter, citing a decline in sales for its mobile network upgrades. The world's largest infrastructure vendor expects the slump to continue into 2008.
Meanwhile, missed revenue goals, thousands of job cuts and executive departures are making Alcatel-Lucent an easy target. And Motorola continues to struggle with steep losses in its handset business.
Ironically, despite the fact that not all of these vendors have embraced WiMAX, it is WiMAX that could have a dramatic impact on the direction of these vendors' businesses.
Last March, Ericsson said it had stopped developing WiMAX to concentrate on LTE (Long Term Evolution). Ericsson has said it doesn't foresee volumes coming from the WiMAX market, and it has been busy convincing operators that HSPA is a fine interim solution as they wait for LTE. But WiMAX is heating up, and the stamp of approval from the International Telecommunication Union (ITU) as a 3G standard last week could ensure a broader deployment of the technology around the world. (Ericsson was reportedly one of the opposing forces of that move.) Can Ericsson convince the world's operators that HSPA is a better solution until LTE comes along?
The stakes are equally high for Alcatel-Lucent and Motorola. Alcatel-Lucent needs WiMAX to break out of its slump that involves battling it out with Ericsson and Chinese vendors such as Huawei for UMTS/HSPA upgrades, which are slowing. Alcatel-Lucent has been using WiMAX to rally itself back into the good graces of investors by touting itself as No. 1 in the worldwide WiMAX market with more than 70 pilots and deployments across the globe and 15 commercial contracts signed since the beginning of 2007. ÂÂ
Motorola is the vendor with the greatest reliance on WiMAX for its future success in the mobile infrastructure business since it doesn't have any significant growth in UMTS/HSPA. It also makes big claims for the rate of trial and adoption of its mobile WiMAX systems, including a deal with Sprint Nextel. For sure, WiMAX has significant momentum but a host of uncertainties still lie ahead for WiMAX, including the fact that it actually has to demonstrate a full-scale commercial deployment and prove the incredible cost benefits that pundits have placed on it.
For both Alcatel-Lucent and Motorola, mobile WiMAX is their best hope for a major growth spurt, while Ericsson is hoping the WiMAX market will lose some steam when "reality" sets in. -Lynnette
Comments
Posted by Fabricio Martinez and Ian Goetz, AIRCOM International | October 24, 2007 - 10:14am
Ian Goetz, Director of Core Network Solutions & Fabricio Martinez, Consulting Pratice Director, AIRCOM International
It seems like every attempt to show WIMAX as a competitor to HSPA/LTE results in making HSPA/LTE stronger. In our opinion, they are not competing technologies and they should stop being compared as head to head competitors, because these technologies can complement each other in several ways. WiMAX 802.16e has handover capability, HSPA does as a well but has been designed as a system and has a supporting eco system. Spectrum allocation and services to be offered have a major impact on technology decisions. WiMAX, due to a lack of core network and end to end standards is being adopted more heavily for fixed network applications in the broadband space whereas HSPA is being used in the mobile space where mobility and roaming are required. They overlap in the nomadic data market.
With regard to the recent announcement from, Ericsson, they may be concentrating on LTE, but in doing so they are well positioned for 802.16m WiMAX where the main difference is the up-link, so they will be able to jump back into this technology again, if necessary. Ericsson’s comments on a slow down on network upgrades is likely to be an on-going symptom of a problem the industry has not solved since 3G’s inception, what data services do people want to use whilst on the move. “Mobile†WiMAX and HSPA must both address this issue. With cracks appearing in the mobile communities “walled gardens†for data services, changing tariffs on data access and new iconic devices such as the iPhone it may be that 2008 will see the long awaited increase in mobile data traffic.
However, one point that was missed is that we are less than 12 months to Huawei, ZTE and Samsung having complete 802.16e “Mobile†WiMAX product ranges, which will do to the WiMAX market - in terms of revenue and margin – exactly what they have done to the 3G/HSPA market. This applies to the CAPEX of equipment, both WiMAX and HSPA need to address the issues of cost per bit and hence adopt architectures, particularly in the back haul, that remove much of the cost of delivering data services.
WIMAX is setting the direction and LTE, with the back up of the existing global 3GPP customer base, will benefit from the lessons learned and the direction set by WiMAX.
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