With the rise of LTE, we find great woe and tearing of hair among the supporters of WiMax. Intel, long a WiMAX booster, closed it’s Taiwan WiMax office and it seems you can’t swing a dead iPad these days without hitting another story about WiMax’s woes and its upcoming demise in the face of LTE.
Mind you, I can remember back in 2004 when the WiMax posse (as I liked to call them) swore that WiMAX had slain wifi and all those folks investing in wide-area mesh networks using sad little unlicensed wifi had wasted their money because WiFi was dead! dead! dead! This, of course, will come as news to both Cablevision and AT&T, both of whom announced major wifi network builds in the last few months. And, of course, Wifi itself previously “killed” bluetooth, which is why it is so hard to find bluetooth enabled devices anymore.
There is a lamentable tendency among analysts and trade reporters to confuse “technology” with “business model.” WiMAX, like wifi and bluetooth, are technologies. They have particular uses. A number of early adopters, equipment makers, and investors hoped that these technologies would facilitate certain business models and use these business model predictions to promote the new technology. Reporters and analysts promptly confuse the two, often further compounding the error by swooning over ridiculous business model predictions, then rushing to declare the technology dead once the far-too-optimistic business predictions come to pass. This promptly creates an investment opportunity for those able to distinguish between technology and business model and hype from substance and adoption.
Lets take one example. Everyone “knows” VOIP is dead. What they actually mean are stand alone providers whose business model is “act like a cheap telephone company for anyone with a broadband connection” like Sun Rocket or Vonage are dead. VOIP as a technology is going great guns, as anyone who uses Skype or subscribers to a cable provider’s voice service, can tell you. Heck, even “dead” companies” like Vonage have enjoyed a pleasant afterlife finding their niche. If you bought Vonage a year ago, you actually doubled your money. But you quadrupled your return if you bought Acme Packet which you probably have not heard of before and which you might guess from the name makes exploding internet applications to download to your “Wile E Coyote Supergenius” phone. Actually, Acme Packet makes VOIP products and manages VOIP services for cable operators — who continue to expand their market share every quarter. Not bad for a “dead” technology.
Which brings us to WiMAX and it’s purported death. WiMAX as a technology is pretty healthy. Developers have finally worked the bugs out of it. It appears a reasonable workhorse for wide area and point-to-point networks. Clearwire may actually be able to popularize it for consumers given that it now has a hand held device and the leading wireless network providers such as AT&T and Verizon are busy explaining how heavy data users are “bandwidth hogs,” creating price packages that punish people who actually want to use a supposed “always on” mobile broadband service for always on broadband access, and generally making their mobile broadband access service as slow and overall useless as possible. And, as the surge of interest following India’s recent spectrum auction makes clear, there remains a very healthy, untapped market for WiMAX enabled equipment outside the U.S.
Even in the U.S., I would not rush to crown LTE King of Mobile Consumer Connectivity just yet. Certainly the embrace from the major US telcos guarantees LTE a huge customer base and a passel of chip developers and hardware manufacturers dying to obey AT&T and Verizon’s every whim for a chance to sell to their captive customers, which will force the other wireless providers to embrace LTE as well. That is, after all, how mass markets work. As long as AT&T and VZ have 60% of the most desired market between them, providers will build devices to their specification, which will force the competitors of AT&T and Verizon to have technologies compatible with those handsets — which means LTE. Combined with a healthy push from the FCC to force public safety to standardize on LTE (for reasons too complicated to discuss here), this absolutely guarantees that those LTE developers and manufacturers lucky enough to be blessed by AT&T and VZ will enjoy a huge market advantage that WiMAX developers, manufacturers and providers can’t touch. But all that ignores the tremendous markets that AT&T and VZ (as well as the other major consumer-oriented cellular carriers) do not serve. The FCC is pushing a lot of spectrum out for commercial use over the next few years, and while everyone blathers endlessly about the iPhone, the real spectrum crunch is hitting industrial and business-to-business users.
WiMAX providers and equipment manufacturers smart enough to give up on the dream of serving the very lucrative consumer market will find an immediate business opportunity for this unserved market segment. WiMAX is actually here. It’s networks are ready to deploy. A lot of people need backhual, or low-bandwidth machine-to-machine transmission, or various business applications, none of which need to ride on a much more expensive network optimized for consumer use. And, as a wild card, we have cable companies lurking in the wings, weighing whether to resell Clearwire service as a means of competing with any future AT&T and Verizon real mobile offering (as opposed to the overpriced, highly-restricted “data packages” they sell today).
So mourn not for WiMAX. Like WiFi, Bluetooth, and VOIP before it, I expect it to have a very active afterlife now that the experts and the analysts have declared it dead.
Stay tuned . . . .