WiMAX and the Wild, Wild West : Chip vendors bullish, few may succeed

Intel Corp. has a vision for portable, personal broadband that will ensure the company transitions from “Intel Inside” to “Intel on the Internet.”
Mobile WiMAX plays a big role in chip vendor’s vision, according to Intel’s Ron Peck. Intel is prepared to turn out WiMAX chips “abysmally cheap, abysmally fast.” The mobile WiMAX phase is ramping now, and Intel said it plans to be shipping PC cards in the fourth quarter for laptops to enable Wi-Fi/WiMAX connectivity, Peck said.
IPR issues
Thanks to widely dispersed intellectual property in WiMAX, according to Peck, there will be fewer if any major court battles hampering the journey to portable, personal broadband. Not surprisingly, this view is not universally shared-more in a moment. Heated competition between chip vendors in the space will lead to shakeout, Peck said, confident that Intel is positioned to cause some of that shakeout.
“It’s going to be the ‘wild, wild West’ for a year or two,” Peck said of the North American market.
Intel’s position in the North American WiMAX market will be aided by its existing relationships with leading laptop vendors, though no deals for WiMAX had been announced by last month. But beyond PC cards and WiMAX chips embedded in laptops, Intel’s vision gets fuzzy.
“We think WiMAX is a big-screen technology,” Peck said. “Ask someone else about using it in handsets.”
“Since Samsung [Electronics Co. Ltd.] will likely be one of the leading suppliers of WiMAX handsets, the silicon suppliers that Samsung selects stand to attract the most near-term market share,” said Mike Thelander, principal at Signals Research Group L.L.C., in a recent report on the WiMAX chip market.
Samsung, like other handset OEMs, does not discuss its component suppliers.
Aggressive startups
Beceem Communications, one of another score of WiMAX chip companies, is happy to talk handsets because the company is courting handset OEM customers on Samsung’s scale. As a three-year-old, VC-funded startup, Beceem is able and willing to take the necessary risks to exploit WiMAX, according to Lars Johnsson, the company’s VP for business development.
By dint of early investments by, or market opportunities with Samsung, Intel, NTT DoCoMo Inc. and Motorola Inc., Beceem says it is poised to rule the market-so the company will tell you-with chips for the “terminal,” a term chosen to denote the range of possibilities, from laptops to handsets to consumer electronics. (Of course, the company is sure to face competition from others with the same grand plans.)
Beceem will couple its WiMAX baseband chip offering with radio-frequency chips to “better control the environment” and provide a value-added product that affords its customers “one-stop shopping.”
Volume, volume, volume
Terminals of all kinds will be sold unsubsidized through consumer channels, rather than carrier retail channels, according to Sprint Nextel Corp.’s WiMAX plans, articulated at its “Technology Summit” in August. Johnsson said such a business model would bring greater profits for device makers, which in turn should keep some WiMAX chip vendors busy and, presumably, profitable.
That scenario depends, much like chip vendor-handset vendor relations in general, on whether chip vendors have high-volume customers among the handset vendors.
“We’re just a chipset vendor,” Johnsson said, “So we’re looking at a limited customer base.”
Beceem clearly believes that its self-described head-start will position it favorably among its possible customers. Johnsson, when pressed, will tell you to keep an eye on competitors such as San Jose, Calif.-based GCT Semiconductor, Runcom Technologies Ltd., based in Israel and Sequans Communications, based in Paris. Other parties plunging ahead include: Texas Instruments Inc., Altair Semiconductor, Comsys, Fujitsu Ltd., NextWave Broadband, RedDot Wireless, Redpine Signals, Samsung, TeleCIS Wireless, Troicom and Wavesat.
Among the companies that have not publicly plunged ahead with plans to enable mobile WiMAX terminals: Qualcomm Inc., Freescale Semiconductor and Atheros. Freescale, for instance, is working on WiMAX-focused customer premises equipment and base stations. PicoChip also works on WiMAX infrastructure. Though it owns and develops OFDM-related intellectual property, Qualcomm has not taken the plunge, at least publicly, on serving the WiMAX terminal market. These companies may take the plunge if they see the market take off or they may seek only to monetize their IP, according to Johnsson.
So much for those smitten by WiMAX’s possibilities. And now for something completely different, as Monty Python once announced: the doubters.
Jane Zweig of The Shosteck Group, with long experience in the wireless industry and its hype cycles, questions many WiMAX maxims being bandied about without critical evaluation. Zweig noted the seemingly disparate nature of various players’ commitments and visions for the space.
Intel’s vision of embedding its chips in laptops doesn’t match Sprint Nextel’s vision for handsets and a wide range of consumer electronics products, Zweig said. Nokia’s plans for WiMAX-only handsets reflect the risk for handset vendors until the market scales upward, the analyst said. Sprint Nextel needs handsets that are backwards compatible to CDMA, but only Samsung has indicated it has such a device. Can vendors manufacture and retail relatively inexpensive devices bearing relatively expensive, $20 chipsets? The notion that a consumer electronics device, such as a digital camera, can send photos to other devices relies on the intended receiver owning a WiMAX-enabled device running a similar service.
“These are the pieces nobody is looking at,” Zweig said. “What will WiMAX really do that current technologies cannot do, especially with 3G devices coming in under $100? I question WiMAX’s ability to scale quickly, especially with 3G just beginning to ramp after five years of effort. I question the entire ecosystem.”