Taiwan WiMAX operators purchasing network cards, dongles and routers- handheld devices not on radar screen

More and more, we are being convinced that mobile WiMAX will not be heavily used by consumers. That's because of the lack of hand held devices to access the mobile Internet. Here's the latest documentation of this trend:

Taiwan-based WiMAX operators are currently focusing their purchases of WiMAX CPE products on network cards, dongles and routers, but showing less interest in handsets, notebooks and netbooks, according to industry sources.

WiMAX operators are reluctant to purchase WiMAX-enabled handsets as the coverage of their current WiMAX networks is lower than the 2G and 3G networks and the supply of WiMAX handsets is also limited, the sources noted.

However, Vee Telecom Multimedia, a WiMAX licensee for southern part of Taiwan, may purchase an integrated WiMAX/Wi-Fi device together with its strategic partner Clearwire that will enable it to promote WiMAX services with handsets, the sources indicated.

Although notebook vendors such as Acer and Asustek Computer have sent notebooks and netbooks with built-in WiMAX modules to operators for interoperability testing, the operators are still skeptical about offering bundled sales promotions due to a lack of other supporting devices that can also access the networks, the sources added.

http://www.digitimes.com/news/a20091223PD204.html

A marketing communications manager from Sprint recently told me: "every WiFi device is potentially a WiMAX device." Do you really believe that?

Her reasoning was that the WiMAX subscriber is going to carry the WiFi device(s) along with a personal WiFi hotspot and an external WiMAX modem where ever they go. Contrast that with the typical consumer texting and/or talking on a cell phone while walking on the street.

The new rumor is that Sprint will announce a Windows Mobile based WiMAX phone from LG at the CES in a couple of weeks. Who cares? Probably the first WiMAX phones won't even use WiMAX for voice, as mobile VoIP is not mature. Instead, they will use cellular voice (that's CDMA for Sprint). It seems too late for WiMAX enabled phones to reach mass market status (which is needed to lower the price and attract more customers). The mainstream cellular operators are all focusing on 3.5G and LTE which will be coming in late 2010. To this extent, mobile WiMAX has squandered its time to market advantage over LTE

Care to differ with me? I welcome other opinions.

Comment by Robert Syputa on December 25, 2009 at 12:29pm: You seem shocked.

Developing a mass market(s) relies on harnessing of key factors for adoption. To simplify, we can go back to Marketing 101's "Three Ps": Product, Price and Place.

- Product: Wireless is becoming a universal broadband media, serving from personal area, local area, to wide area fixed to fully mobile service. 3.5G-4G 'mobile' networks have become capable of fulfilling a wide gambit of applications from machine-to-machine embedded fixed to high end mobile devices. As WiMAX has evolved over the past several years it has needed to become mobile in order to achieve the critical mass of supply and market ecosystems.
-Price: WiMAX has done a good job in developing an ecosystem that has driven down the price points for subscriber units and infrastructure equipment. With the cost for IPR shaping up to be more reasonable than found in 3G, and low barriers for entry of new suppliers, the market for WiMAX ICs, modules, dongles, CPEs and base stations is sufficient to be competitive. However, that challenge has been to attract the compelling mobile devices and user adoption. That is where WiMAX has failed to take advantage of what, not long ago, was thought to have been an insurmountable lead.

Place: In the wireless space, Product is critically tied to spectrum: The higher frequencies are most suited to fixed-nomadic and overlay to achieve 'fully mobile', always-connected coverage. WiMAX lacks access to lower frequency spectrum suitable for mass market deployments. Mobile devices can be made to run on WiMAX networks operating in >2 GHz spectrum but battery drain becomes a critical factor, particularly for use where signal levels are low, such as when a large percentage of users are up to miles away from base stations or are inside of buildings which attenuate signal strength.

Mobile device suppliers must consider each market opportunity: A) What is the total available market and what penetration can they hope to achieve? B) What is the competitive landscape and pricing structure of the market?

Regardless of whether they consider development or re-design of a mobile device for 2G-3G or WiMAX, suppliers must consider the coverage of the operator(s) in terms of number of POPs, the market position of the operator, and extent of cooperation in sales and marketing efforts, etc. WiMAX faces the same basic hurdles as does any other mass market product: where can it be sold and for how much? Thus far, WiMAX is still in the building process but has already lost much of its perceived time to market advantage.

Many handset suppliers I have talked with say that they need a market of about 100 million POPs before entry looks worthwhile. That number can be spread across geographies and, within thresholds, across complimentary spectrum bands.

The big fallacy that WiMAX has confronted is that fixed-nomadic applications would develop into mass markets. The market has been on an evolutionary path toward greater infusion of mobility into unified 'ultra-connectivity'. The ploy to become a cheap 'third leg' fixed BB transport never made sense except as a part of the unified strategy.

This discussion goes back about nine years. Most of the strategic positioning needed to take place years ago.

On the other hand, WiMAX technology and market impact lives on in the direction of 3.5G-LTE. The supply situation is drastically more open and established players are being quickly overtaken. Companies such as Intel, Huawei, ZTE, Samsung, have become leaders in the new platforms of technology that were kicked off by WiMAX.

-Robert Syputa

Partner, Maravedis
www.cloud4g.com

Comment by Alan J Weissberger on December 25, 2009 at 12:57pm: Robert

Thanks for your comprehensive comment.

No, I am not shocked, just disappointed. I have been pounding the drums with Clearwire and Sprint about the need for hand held WiMAX devices for quite some time. But I can't hold my breath anymore and now think it's too late to see any mass market for WiMAX handheld devices as envisioned by Intel "The Mobile Internet in Your Pocket" (subject of the Jan 2008 IEEE ComSoc SCV meeting).