If you’re wondering what shape WiMAX-enabled devices will take, you can hop a plane to South Korea and see Samsung Electronics Co. Ltd.’s two models in action on SK Telecom’s WiBro network.
Samsung’s M8100 is the world’s first WiMAX-equipped PDA-style smartphone, a slider model running Microsoft Corp.’s Windows Mobile that offers a touchscreen display and two cameras, one for still pictures, one for video-conferencing. When not taking advantage of a WiMAX network, it runs on a CDMA2000 1x EV-DO cellular network.
The P9000 from Samsung is an ultra-mobile PC-like converged device-try saying that three times, fast-that runs Windows XP and offers a fold-out QWERTY keyboard and five-inch WVGA screen with 30 gigabytes of embedded memory and microSD slot for expanded capacity. It also runs on an EV-DO network when not WiMAX-ing.
Enterprise focus first
These two concrete examples point the way, but the gamut of mobile devices likely to become WiMAX enabled is as broad as your imagination. Smartphones, UMPCs and PC cards for laptops are likely to launch first to capture the enterprise and productivity markets before WiMAX capabilities spread to devices that will attract consumers, including a range of consumer electronics devices utilizing broadband speeds to enhance their functionality. Think portable gaming consoles in a multi-player, social networking model, according to Philip Solis, analyst at ABI Research.
Given the initial focus on enterprise-friendly devices, Solis said, the price of early WiMAX devices in, say, a smartphone form factor is likely to run fairly high. Initially, retail pricing for WiMAX-enabled smartphones will be $400 to $600 before subsidies, Solis said. In the U.S. market, aggressive subsidies of perhaps $200 might bring prices down to the $200 to $400 range, the analyst said. WiMAX-enabled consumer electronics devices will sell through typical consumer electronics retail channels and thus will not be subsidized.
As the WiMAX market debuts, device prices may remain high due to the cost of WiMAX chipsets, according to both Solis and Peter Skarzynski, senior vice president for handsets at Samsung Telecommunications America.
“The general hurdle is the cost of a WiMAX chip,” Skarzynski said. “But just like everything else in this business, once you see millions of units shipped, the cost rapidly descends. And as WiMAX chips come down in price, many traditional PC and laptop makers will be putting those chips into their devices.”
Solis concurred on the likely rollout scenario.
“Initially, I’d expect WiMAX handsets to be of the smartphone variety,” Solis said. “At first, WiMAX handsets will combine EV-DO and WiMAX in a smartphone to better use the data connections offered by the WiMAX technology. Think of the first devices as today’s smartphones with an extra radio that provides an ‘always-on’ connection. Where cellular handsets have to ‘wake up’ and connect to the network, with WiMAX, there’s no wait time.”
In the beginning, WiMAX-enabled smartphones and laptops will serve the enterprise, then uptake will move to the bigger consumer market, Solis predicted.
Vendor opportunities
Vendors must add chipsets capable of transmitting and receiving in the 2.3, 2.5 and 3.5 GHz frequencies (the latter for global rollouts). Initially, 2.3 and 2.5 GHz are likely to be combined for the U.S. market only, the analyst said. A number of WiMAX chip vendors will be familiar faces (think Texas Instruments Inc., but not Qualcomm Inc., yet), but many players that have been toiling in fixed broadband product lines, or are entirely new efforts, will move into the mobile market via WiMAX. Those chip vendors include, among others, Sequans Communications, WaveSat, Comsys Mobile Communication & Signal Processing Ltd., picoChip, Beceem Communications and Runcom Technologies Ltd.
Though Samsung has bolted out of the starting gate with actual devices, several top vendors are moving ahead with their plans, which remain largely under wraps.
The early advantage of the top trio intent on offering WiMAX devices-that’s Nokia, Samsung and Motorola-is that they are involved in Sprint Nextel’s and Clearwire’s WiMAX efforts by virtue of having both the infrastructure piece and the device piece of the puzzle. Sprint Nextel and Clearwire plan to cover about 100 million people in the U.S. by the end of next year and end-to-end solution providers have an edge.
Handsets may fall into a somewhat familiar pricing scenario, but the cost and structure of WiMAX service plans remains a big variable.
“Because WiMAX eventually will be on so many devices, Sprint probably will create a service plan that makes it cheaper the more devices you run, akin to a family plan,” Solis said.
Major players
Let’s take a quick look at the major WiMAX device vendors and their plans:
Samsung, though first to market in Korea, has not made any details of its U.S. device plans public yet, according to Skarzynski.
“In the first quarter of 2008, you can expect to see a number of different products for Sprint and other carriers,” Skarzynski said. “Not just dual-mode handsets, but products for PCs, UMPCs, laptops, gaming consoles and other consumer electronics products.”
A reorganization at Samsung, in part, is enabling the vendor to take advantage of its broad range of consumer electronics products to advance its fortunes in the mobile space, according to analyst Chris Ambrosio at Strategy Analytics.
Nokia announced at the International Consumer Electronics Show in Las Vegas earlier this year that it is committed to developing and marketing WiMAX-enabled devices in volumes. At first, these devices are likely to be Internet tablets produced by the Finnish vendor’s multimedia unit. The devices are expected to hit the market in the first half of next year, but no specific products or other details have been announced, according to spokeswoman Camilla Gragg.
Motorola is similarly tight-lipped on its WiMAX device plans. According to the vendor, it is working with many partners to deliver CPE and PC cards and mobile devices. According to spokeswoman Maria Parra, the vendor plans to deliver mobile WiMAX devices in the second half of 2008.
Sony Ericsson Mobile Communications and LG Electronics Co. apparently are keeping tabs on the technology and the emerging market for it and assessing the relevant business metrics to determine if and when to take the plunge into WiMAX devices.
Sanyo Electric Co. Ltd. is said to also be working on dual-mode, CDMA/WiMAX handsets for Sprint Nextel-but officially, Sanyo, which has a strong relationship with Sprint Nextel as a handset supplier, is mum, according to Sanyo spokesman Mike Hine.
ZTE USA Inc., also announced earlier this year that it had signed an agreement with Sprint Nextel to provide the carrier with WiMAX PC cards in “express” and USB forms, as well as “advanced modem solutions” for home networking. ZTE also has a background in networks as well as devices.
All these efforts, of course, are not shots in the dark. Sprint Nextel and Clearwire, along with their infrastructure vendors, are investing untold amounts of money to realize the promise of WiMAX. That makes investments in devices, particularly for first-to-market vendors, a reasonable bet, according to Samsung’s Skarzynski.
WiMAX is coming on as the U.S. market, for instance, is reaching maturation and saturation, Skarzynski said. With penetration reaching 80%, U.S. consumers will continue to upgrade their handsets and that often means spending a little more for the next device. Smartphones today account for perhaps 10% of the U.S.’s annual purchase of about 160 million units, a slice that will grow to 15% to 20% of sales as Americans buy better handsets in an upgrade cycle.
“We see [WiMAX] as having a large growth potential,” Skarzynski said. “Samsung has a great capability to deliver parts of the home network to deliver content directly from the providers. The technology is there to enable different content providers to reach consumers. Samsung is looking to stake its clai
m to this market.”
“We’re helping to create an ecosystem,” the Samsung vice president said. “Samsung is one of the first. That means a higher likelihood of making money and establishing brand recognition.
“There are lots of opportunities out there in the market for this ‘rich pipe,'” Skarzynski concluded. “Entertainment companies will be figuring out how best to reach the consumer using this technology. If you look at the ecosystem, it’s not just carriers, it’s cable companies, entertainment-based companies and others who will seek to bypass traditional players to reach the consumer. This will spawn a different set of dynamics in two to three years.”
“WiMAX offers wireless broadband at its best,” Skarzynski said. “Anything you can do with fiber or cable you can do with WiMAX. High-speed up- and down-links in both mobile and fixed environments will deliver broadband via PCs, UMPCs, laptops and phones. Even though Sprint is the carrier, they’re expecting other companies to offer products and services not thought of today.