Last week Ericsson revealed what we already knew: That it has stopped developing WiMAX to concentrate on Long Term Evolution (LTE), the 4G evolution for WCDMA networks. The world's largest vendor confirmed that it will be the only major vendor to stay out of the WiMAX market, instead relying on a reseller strategy with Airspan for fixed WiMAX equipment, which is quickly becoming a limited market.
The rhetoric coming from Ericsson is that the company doesn't foresee volumes coming from the WiMAX market, and it has been busy making presentations explaining why waiting for LTE is a better strategy for operators. Now this sounds familiar. It's the same strategy Ericsson employed when CDMA technology came to market. Ericsson was CDMA's biggest critic in the 1990s, fighting its entrance on many levels, including in 3G standards-setting bodies. In 1999 it finally acknowledged that CDMA was a technology contender and bought Qualcomm's CDMA infrastructure division, determined to become a top vendor in the space.
But Ericsson's entrance in the market was too late. Contracts were already wrapped up with the Tier 1 operators. It shuttered the business in 2005 after failing to establish a presence in the U.S. market.
Now Ericsson's stance on WiMAX could turn into round two. Without a strategy to support mobile WiMAX, it could miss out on two fronts: a real opportunity to sell equipment and valuable experience in developing networks based on OFDMA technology.
The latter cannot be underestimated. Competitors Alcatel-Lucent, Nortel Networks, Motorola and Samsung will have some real-world experience with OFDMA-based mobile WiMAX systems under their belts by the time LTE comes to market optimistically in 2009. The entrance of OFDMA in the mobile operator world essentially levels the playing field as CDMA and WCDMA operators won't be tied to a particular vendor any longer. They'll be fork lifting their networks to UMB, LTE or even WiMAX and looking to those vendors who have commercial experience with OFDMA systems.
Ericsson should also be concerned by Vodafone CEO Arun Sarin's comments during last month's 3GSM World Congress in Barcelona. Sarin admitted that LTE is far from being implemented, let alone standardized, and surprised the audience by suggesting that LTE may not even be supported by Vodafone in the future.
Ericsson's response is that the industry will standardize LTE technology this year and will have it commercially to market by 2009--a lofty feat considering how the industry never delivers technology on time. Ericsson staged what was claimed to be the first demonstration of the technology at the 3GSM conference. The demonstration achieved speeds up to 144Mbps on a 20MHz carrier in the 2.6GHz band.
Certainly there are a host of uncertainties 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. But the simple fact is that WiMAX has the luxury of maturing before LTE does.
Will Ericsson get burned a second time around? -Lynnette