WiMAX: Sprinting to the Lead?
Last August when Sprint, the third-largest mobile operator in the U.S., announced it would spend $3 billion over the next two years on WiMAX, people noticed. While still a relatively nascent technology, WiMAX is picking up steam; analysts report increased investing and adoption. However, WiMAX, while receiving much attention for its ability to provide wireless data over long distances, is not the only possible successor to Wi-Fi's throne. Discussions about the role WiMAX may play were renewed in March when Clearwire, the second largest holder of WiMAX spectrum, IPO'd. For many Clearwire has become the focus of attention, with the suggestion that 'as goes Clearwire, so goes WiMAX'; unfortunately the message is anything but clear.
Founded three years ago by wireless icon Craig McCaw Clearwire now operates in more than 30 markets and claims a subscriber base of just over 200,000; it became the second largest holder of 2.5 GHz WiMAX radio frequency spectrum, behind Sprint Nextel, when it purchased the majority of its spectrum from AT&T. Depending on whom one asks, the results of March's IPO either cemented the technology's success or put the nail in its coffin. Investor's Business Daily remarked that the stock debuted at $25 a share, "the highest end of its expected range." However, not everyone sees this as a victory for Clearwire or WiMAX. InformationWeek says, "the cold investor response to its public offering this month raises questions not just about Clearwire's prospects, but about the future of WiMAX." Forrester Research Analyst Phil Sayer, quoted in Red Herring, “[Investors] realized that WiMAX is just another competing technology . . . It has a future, but it is not likely to be the best thing since sliced bread.” NetworkWorld writes, "Clearwire's $600 million initial public offering earlier this month is either a ringing endorsement of WiMAX or another overblown service provider IPO, the likes of which we haven't seen since the height of irrational exuberance."
Those on the side suggesting the IPO is no ringing endorsement point beyond the falling stock price, it has dropped below $19, to other red flags. NetworkWorld reports, "the IPO windfall won't last long: the company reportedly will need $800 million to cover 2007 debts and other expenses. And it likely will have to issue even more stock to keep its momentum." Red Herring notes that the company has yet to turn a profit, "The Kirkland, Washington-based company posted a net loss of $284.2 million in 2006 on sales of $100 million." With such flags raised one may ask what Clearwire, and WiMAX, has on its side. For starters, there are its backers.
Last July Clearwire balked at an IPO; instead it opted for a $900 million cash infusion from Motorola and Intel. According to Investor's Business Daily, Intel's portion of that, $600 million, is the most it has invested in an outside company. Regardless of the view one takes of the IPO outcome Intel's support remains and is not likely to wane. Intel is manufacturing chips to allow computers to connect to the Internet via WiMAX in much the same way they now do for Wi-Fi; the company, therefore, has a vested interest in the technology's success. Sriram Viswanathan, vice president of Intel Capital believes WiMax has arrived, "It's no longer a niche technology. The stuff is here," Viswanathan said. In that assessment Intel is not alone, Nortel agrees.
According to Bloomberg, "After doubling its WiMax investment last year, Toronto-based Nortel has gained four commercial customers and is doing trials in North America, Europe and Asia." Though Peter MacKinnon, Nortel's general manager of WiMax reportedly would not say how much the company was spending, he did tell Bloomberg, "2007 is really the year we can prove that WiMAX is not this niche application.'' Of course Sprint falls into the category of avid supporter as well.
Sprint anticipates the outcome of its $3 billion investment to be a network reaching 100 million people in 19 cities by the end of 2008. To reach that end the company has partnered with Samsung, which will be developing PC cards for the network, ZTE which will help with PC cards and supply devices, and Zyxel Communications which will supply modem products. On the networking end, partners include Motorola, which will be developing Chicago, Detroit, Indianapolis, Kansas City, Minneapolis and Grand Rapids; and Nokia which will develop Austin, Dallas/Fort Worth metro area, Denver, Salt Lake City, San Antonio, Seattle and Portland, Ore. While Sprint's investment does show support for WiMAX it is also spurred by other factors. InformationWeek states, "Dogged by slowing subscriber growth for its cellular voice service, Sprint essentially staked the company's future on WiMax." Big backers and big bucks may help tip the scales in its favor, but some doubt the intelligence of Sprint's investment (as well as the future of WiMAX).
In its piece on the issue Red Herring points out, "The trouble is that WiMAX is not the leader in any of its various markets. In the fixed broadband market, WiMAX competes with DSL and cable modems. In the mobile broadband market, it competes with cellular services such as EV-DO. And in the business wireless market, it competes with both Wi-Fi and cellular broadband." InformationWeek draws much the same conclusion, WiMAX it says is, "competing with third-generation cellular networks and other technologies that also could blanket regions with wireless connectivity." InformationWeek also quotes Jane Zweig, head of telecom consulting firm the Shostek Group, "What is WiMax really going to do that these other broadband mobile technologies in evolution won't be able to do? . . . The cable companies, the telcos, everybody is or will be offering the same type of service." Apart from differentiating itself from its competitors WiMAX also faces the challenge of reaching its customers.
It has been suggested that in order to position itself as a service to the business community, not just the consumer market, WiMAX must have truly national coverage. Despite marketing itself as the bringer of ubiquitous wireless broadband, WiMAX suffers from the fact it does not yet have a network in place to serve it. This challenge leads Joe Nordgaard, director of the wireless consulting firm Spectral Advantage, to an interesting conclusion. With neither Sprint or Clearwire having the needed reach Nordgaard suggests the two may need to reach a deal; perhaps the sale of Sprint's investment to Clearwire or the purchase of Clearwire by Sprint. “WiMAX’s only unique strength could be its national reach and its bandwidth, and that may involve getting the two companies together.”
"We're moving into a new age of mobile broadband that will enable access to the Internet from anywhere," Berge Ayvazian, chief strategy officer for the Yankee Group said. On this trip WiMAX is but one possible route. Tammy Parker, an analyst with Informa Telecoms & Media, told Reuters, "It would not be accurate to call 2007 'the year of mobile WiMAX,' . . . But it's clear that the future of this technology in the U.S. will be built upon the foundation being created this year." Whether WiMAX serves as more than the foundation will take some time to determine.
A more complete version of this posting, with journal articles, and research reports can be found at the website of Analyst Views Weekly.
More information on this topic can be found in Northern Light's Telecommunications & Equipment Market Intelligence Center.
And in the following articles:
Mobile WiMax Closer to Reality
PCWorld, April 10, 2007
Mobile WiMax, hyped for years by Intel Corp. and other vendors, has turned a corner toward reality, according to industry observers. Mobile technology is outpacing the licensed wireless broadband market overall, and gear based on the emerging IEEE 802.16e mobile WiMax standard is leading the way, Sky Light Research said Monday.
New WiMAX Broadband Technology a Boon for Labels
Reuters, April 8, 2007
If you've never heard the term "WiMAX" before, don't sweat it. You're probably not alone. But in the hyper-wonk, tech-speak jargon of the wireless industry, WiMAX is the latest thing making its way through the byzantine maze of acronyms and buzzwords used to remind the rest of the world (with all apologies to Chevy Chase), "We're wireless, and you're not." But WiMAX sometime soon is likely to be one of those terms that the music industry, and others in the content world, will need to know all too well as wireless technologies become an increasingly important distribution channel.
Bucking the Conventional WiMAX Wisdom
VoIP News, April 5, 2007
For a technology that is just emerging into commercial deployment, WiMAX already has a lot of conventional wisdom congealed around it. Most of it has to do with the wireless technology's fabled ability to span great distances in a single hop. For one thing, that's supposed to let WiMAX blanket big chunks of territory using far fewer cells than can WiFi, with its pathetic need for hotspots on almost every corner.
Nokia-Siemens Sees Emerging Mkt Demand for WiMAX
Reuters, April 2, 2007
Nokia Siemens Networks said it hopes to benefit from demand for WiMAX in emerging markets and North America, after rival Ericsson decided to stay out of that Internet technology. WiMAX allows very high-speed Internet access and file downloads from laptops, phones or other mobile devices over greater distances than previous technologies.
Nortel Expects Growth from WiMax with New Customers
Bloomberg, March 27, 2007
After doubling its WiMax investment last year, Toronto-based Nortel has gained four commercial customers and is doing trials in North America, Europe and Asia. Nortel is struggling to rebound from losses in seven of the past eight quarters, when rivals such as Cisco Systems Inc. won more clients for corporate phone gear and networking equipment.
Sprint Unveils WiMax Plans
CNET, March 26, 2007
Sprint Nextel is pushing forward with its plan to build a high-speed mobile WiMax network with the announcement of new device vendors, as well as additional markets where the network will be deployed. Sprint, which is the third-largest mobile operator in the U.S., said in August that it would spend $3 billion in the next two years to build a network using the IP-based wireless technology known as WiMax.
Clearwire: Taking WiMAX to the Street
BusinessWeek, March 5, 2007
On Mar. 6, Clearwire, the company headed by wireless pioneer Craig McCaw, is expected to sell shares in what could be one of the most talked about—and sought-after—tech initial public offerings of the year. The Kirkland (Wash.) company, which provides services through the wireless broadband technology known as WiMAX, plans to offer up to 23 million shares, at $23 to $25 each.
Founded three years ago by wireless icon Craig McCaw Clearwire now operates in more than 30 markets and claims a subscriber base of just over 200,000; it became the second largest holder of 2.5 GHz WiMAX radio frequency spectrum, behind Sprint Nextel, when it purchased the majority of its spectrum from AT&T. Depending on whom one asks, the results of March's IPO either cemented the technology's success or put the nail in its coffin. Investor's Business Daily remarked that the stock debuted at $25 a share, "the highest end of its expected range." However, not everyone sees this as a victory for Clearwire or WiMAX. InformationWeek says, "the cold investor response to its public offering this month raises questions not just about Clearwire's prospects, but about the future of WiMAX." Forrester Research Analyst Phil Sayer, quoted in Red Herring, “[Investors] realized that WiMAX is just another competing technology . . . It has a future, but it is not likely to be the best thing since sliced bread.” NetworkWorld writes, "Clearwire's $600 million initial public offering earlier this month is either a ringing endorsement of WiMAX or another overblown service provider IPO, the likes of which we haven't seen since the height of irrational exuberance."
Those on the side suggesting the IPO is no ringing endorsement point beyond the falling stock price, it has dropped below $19, to other red flags. NetworkWorld reports, "the IPO windfall won't last long: the company reportedly will need $800 million to cover 2007 debts and other expenses. And it likely will have to issue even more stock to keep its momentum." Red Herring notes that the company has yet to turn a profit, "The Kirkland, Washington-based company posted a net loss of $284.2 million in 2006 on sales of $100 million." With such flags raised one may ask what Clearwire, and WiMAX, has on its side. For starters, there are its backers.
Last July Clearwire balked at an IPO; instead it opted for a $900 million cash infusion from Motorola and Intel. According to Investor's Business Daily, Intel's portion of that, $600 million, is the most it has invested in an outside company. Regardless of the view one takes of the IPO outcome Intel's support remains and is not likely to wane. Intel is manufacturing chips to allow computers to connect to the Internet via WiMAX in much the same way they now do for Wi-Fi; the company, therefore, has a vested interest in the technology's success. Sriram Viswanathan, vice president of Intel Capital believes WiMax has arrived, "It's no longer a niche technology. The stuff is here," Viswanathan said. In that assessment Intel is not alone, Nortel agrees.
According to Bloomberg, "After doubling its WiMax investment last year, Toronto-based Nortel has gained four commercial customers and is doing trials in North America, Europe and Asia." Though Peter MacKinnon, Nortel's general manager of WiMax reportedly would not say how much the company was spending, he did tell Bloomberg, "2007 is really the year we can prove that WiMAX is not this niche application.'' Of course Sprint falls into the category of avid supporter as well.
Sprint anticipates the outcome of its $3 billion investment to be a network reaching 100 million people in 19 cities by the end of 2008. To reach that end the company has partnered with Samsung, which will be developing PC cards for the network, ZTE which will help with PC cards and supply devices, and Zyxel Communications which will supply modem products. On the networking end, partners include Motorola, which will be developing Chicago, Detroit, Indianapolis, Kansas City, Minneapolis and Grand Rapids; and Nokia which will develop Austin, Dallas/Fort Worth metro area, Denver, Salt Lake City, San Antonio, Seattle and Portland, Ore. While Sprint's investment does show support for WiMAX it is also spurred by other factors. InformationWeek states, "Dogged by slowing subscriber growth for its cellular voice service, Sprint essentially staked the company's future on WiMax." Big backers and big bucks may help tip the scales in its favor, but some doubt the intelligence of Sprint's investment (as well as the future of WiMAX).
In its piece on the issue Red Herring points out, "The trouble is that WiMAX is not the leader in any of its various markets. In the fixed broadband market, WiMAX competes with DSL and cable modems. In the mobile broadband market, it competes with cellular services such as EV-DO. And in the business wireless market, it competes with both Wi-Fi and cellular broadband." InformationWeek draws much the same conclusion, WiMAX it says is, "competing with third-generation cellular networks and other technologies that also could blanket regions with wireless connectivity." InformationWeek also quotes Jane Zweig, head of telecom consulting firm the Shostek Group, "What is WiMax really going to do that these other broadband mobile technologies in evolution won't be able to do? . . . The cable companies, the telcos, everybody is or will be offering the same type of service." Apart from differentiating itself from its competitors WiMAX also faces the challenge of reaching its customers.
It has been suggested that in order to position itself as a service to the business community, not just the consumer market, WiMAX must have truly national coverage. Despite marketing itself as the bringer of ubiquitous wireless broadband, WiMAX suffers from the fact it does not yet have a network in place to serve it. This challenge leads Joe Nordgaard, director of the wireless consulting firm Spectral Advantage, to an interesting conclusion. With neither Sprint or Clearwire having the needed reach Nordgaard suggests the two may need to reach a deal; perhaps the sale of Sprint's investment to Clearwire or the purchase of Clearwire by Sprint. “WiMAX’s only unique strength could be its national reach and its bandwidth, and that may involve getting the two companies together.”
"We're moving into a new age of mobile broadband that will enable access to the Internet from anywhere," Berge Ayvazian, chief strategy officer for the Yankee Group said. On this trip WiMAX is but one possible route. Tammy Parker, an analyst with Informa Telecoms & Media, told Reuters, "It would not be accurate to call 2007 'the year of mobile WiMAX,' . . . But it's clear that the future of this technology in the U.S. will be built upon the foundation being created this year." Whether WiMAX serves as more than the foundation will take some time to determine.
A more complete version of this posting, with journal articles, and research reports can be found at the website of Analyst Views Weekly.
More information on this topic can be found in Northern Light's Telecommunications & Equipment Market Intelligence Center.
And in the following articles:
Mobile WiMax Closer to Reality
PCWorld, April 10, 2007
Mobile WiMax, hyped for years by Intel Corp. and other vendors, has turned a corner toward reality, according to industry observers. Mobile technology is outpacing the licensed wireless broadband market overall, and gear based on the emerging IEEE 802.16e mobile WiMax standard is leading the way, Sky Light Research said Monday.
New WiMAX Broadband Technology a Boon for Labels
Reuters, April 8, 2007
If you've never heard the term "WiMAX" before, don't sweat it. You're probably not alone. But in the hyper-wonk, tech-speak jargon of the wireless industry, WiMAX is the latest thing making its way through the byzantine maze of acronyms and buzzwords used to remind the rest of the world (with all apologies to Chevy Chase), "We're wireless, and you're not." But WiMAX sometime soon is likely to be one of those terms that the music industry, and others in the content world, will need to know all too well as wireless technologies become an increasingly important distribution channel.
Bucking the Conventional WiMAX Wisdom
VoIP News, April 5, 2007
For a technology that is just emerging into commercial deployment, WiMAX already has a lot of conventional wisdom congealed around it. Most of it has to do with the wireless technology's fabled ability to span great distances in a single hop. For one thing, that's supposed to let WiMAX blanket big chunks of territory using far fewer cells than can WiFi, with its pathetic need for hotspots on almost every corner.
Nokia-Siemens Sees Emerging Mkt Demand for WiMAX
Reuters, April 2, 2007
Nokia Siemens Networks said it hopes to benefit from demand for WiMAX in emerging markets and North America, after rival Ericsson decided to stay out of that Internet technology. WiMAX allows very high-speed Internet access and file downloads from laptops, phones or other mobile devices over greater distances than previous technologies.
Nortel Expects Growth from WiMax with New Customers
Bloomberg, March 27, 2007
After doubling its WiMax investment last year, Toronto-based Nortel has gained four commercial customers and is doing trials in North America, Europe and Asia. Nortel is struggling to rebound from losses in seven of the past eight quarters, when rivals such as Cisco Systems Inc. won more clients for corporate phone gear and networking equipment.
Sprint Unveils WiMax Plans
CNET, March 26, 2007
Sprint Nextel is pushing forward with its plan to build a high-speed mobile WiMax network with the announcement of new device vendors, as well as additional markets where the network will be deployed. Sprint, which is the third-largest mobile operator in the U.S., said in August that it would spend $3 billion in the next two years to build a network using the IP-based wireless technology known as WiMax.
Clearwire: Taking WiMAX to the Street
BusinessWeek, March 5, 2007
On Mar. 6, Clearwire, the company headed by wireless pioneer Craig McCaw, is expected to sell shares in what could be one of the most talked about—and sought-after—tech initial public offerings of the year. The Kirkland (Wash.) company, which provides services through the wireless broadband technology known as WiMAX, plans to offer up to 23 million shares, at $23 to $25 each.
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