Maravedis: 2010, a year of transition for mobile WiMAX

Vikram Krishnamurthy is a senior analyst for chipsets and devices at Maravedis. Shipments of mobile WiMAX chipsets reached 15 million in 2010, up from 5 million in 2009, according to Maravedis' new 4Ggear report on silicon. The growth of WiMAX handsets along with the increasing demand for USB dongles and "network ready" notebooks/netbook attributed to this rather large growth in chipsets. In particular, the emergence of a new device category in 2010--the 4G handset--significantly increased the number of WiMAX customers. With LTE in the early stages of deployment in 2010, competition with WiMAX was not significant; 4G WiMAX offered a competitive advantage in performance compared to 3G and emerging 3.5G devices.

Towards the end of 2010 the launch of Verizon's LTE network, the announcement of future LTE deployments by most major carriers, and the potential shift to LTE by many WiMAX operators (Yota, Clearwire), signaled a major shift towards LTE as the primary 4G technology. This growth of LTE services and devices will certainly cannibalize the market for WiMAX devices and chipsets, resulting in a much smaller WiMAX ecosystem. This was evidenced in 2010 by a shrinking WiMAX chipset ecosystem characterized by acquisitions and exits; Comsys was acquired by Intel, Altair Semiconductor discontinued its WiMAX efforts, and Broadcom acquired Beceem with an emphasis towards LTE development. Nevertheless, WiMAX may have growth opportunities in the WiFi + WiMAX computing device segment. The maturity of low cost integrated WiFi + WiMAX chipset solutions combined with a time-to-market advantage compared to LTE + WiFi solutions can provide a growth path in the near future. The low cost nature of WiMAX chipsets was clear in 2010, with a price range of between $10-15 for baseband and RFIC solutions, depending on shipment volumes. This translates to a 35 percent decrease over 2009 prices. Prices are expected to plateau at $10 within a couple of years, and further price decreases will be gradual as WiMAX chipset volumes will slow down in the face of increased LTE penetration.

In the LTE market the number of chipset suppliers has increased significantly. In segmenting the suppliers, we have the incumbent manufacturers (Qualcomm, ST-Ericsson, and Infineon (now Intel)) focused on a 3G/4G solutions as well as newcomers who leverage their OFDM expertise (Altair, GCT Semiconductor, Broadcom, Sequans, Mediatek), and others who have commercialized previous chipsets (Hisilicon, Leadcore, Innofidei) focusing solely on LTE. The incumbent suppliers will focus primarily on the handset market whereas the "LTE only" suppliers will focus on USB dongles and other computing device platforms.

Last year 7.7 million WiMAX devices were activated and 7 million new subscribers were added worldwide. Indoor modems represented 24 percent of WiMAX units activated in 2010; USB dongles, PC cards and netbooks accounted for 52 percent; and activated WiMAX handsets introduced by Samsung and HTC accounted for the remaining 24 percent. One of the key areas for growth this year will be tablets. With the immense popularity of the Apple iPad, 4G tablets from a wide variety of vendors will be introduced in 2011. The rapid increase in LTE deployments means a reasonable number of these product introductions will be focused on LTE. In fact, Maravedis expects LTE chipset shipments to reach 10 million units this year. As for handsets, the rapid growth of LTE deployments in 2011 combined with increasing availability of 3G/LTE chipsets by major suppliers will lead LTE to assume a dominant position in the smartphone market, with WiMAX handsets assuming a much smaller market share.

Last year was transitional for WiMAX as LTE deployments began to dominate around the world. Moving forward, WiMAX will seek to find its niche in terms of deployments and devices. More details can be found here.

Vikram Krishnamurthy is a senior analyst for chipsets and devices at Maravedis. Maravedis is a leading analyst firm focusing on 4G and broadband wireless technologies and markets.