What Do WiMax, WiFi, Bluetooth and VOIP All Have In Common? A Very Active “Afterlife.”

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 . . . .

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2 Comments

  1. JB says:

    The problem with this analysis is that WiFi is a very different technology from WiMax, with different strengths and weaknesses and can fill a separate market niche (and even then, there is a big gap between carrier grade WiFi and consumer grade WiFi, each of which has its own fairly successful niche). Bluetooth is practically in a whole different universe from WiFi and WiMax–anyone who thought that it was in direct competition with either of those platforms was being foolish.

    But what can WiMax do that LTE can’t do better? Particularly once LTE starts to enjoy greater efficiencies of scale on the manufacturing side and a more vibrant ecosystem of user devices (which it inevitably will). They compete in the same niche, and as the de facto market standard, LTE will always be competing with a strong wind at its back. The only real advantage WiMax had was that it was first to market, but that advantage has now largely been squandered. I think VHS versus Betamax is a more apt comparison here than Bluetooth versus WiFi. One of these standards will be the winner, and one will be the loser. At this point the market has all but declared LTE the winner. At best, WiMax may position itself as a poor man’s LTE and win some contracts in developing nations…

  2. Harold says:

    Well, since I made this prediction, it turned out that Samsung has come up short on providing Sprint with WiMAX handsets. On the one hand, the high demand certainly shows that WiMAX could position for a good first mover advantage. On the other hand, part of predicting the persistence of WiMAX had to do with establishing an embedded customer base to support it.

    Part of the problem in answering this question is that I hear conflicting reports from engineers about the actual performance of LTE v. WiMAX, particularly for unpaired TDD data transmission. Some folks tell me LTE is about as good, some folks tell me WiMAX is much better — and that the gap is likely to increase as the IEEE 802.16 committee adjusts to the need to differentiate WiMAX from LTE.

    An ability to do efficient two-way in an unpaired environment is a significant advantage, particularly for companies with unpaired spectrum. It would make WiMAX the superior choice for wireless backhaul, as well as for the data applications I described in the post. But we will have to see how this plays out, particularly in light of the Samsung issue.

  3. […] or so blog posts could hold up today as being either accurate predictions (like Wheeler, I too was a big believer in WiMax) or final expressions of what I would have done as Chair of the […]

  4. […] or so blog posts could hold up today as being either accurate predictions (like Wheeler, I too was a big believer in WiMax) or final expressions of what I would have done as Chair of the […]

2 Trackbacks

  1. […] or so blog posts could hold up today as being either accurate predictions (like Wheeler, I too was a big believer in WiMax) or final expressions of what I would have done as Chair of the […]

  2. […] or so blog posts could hold up today as being either accurate predictions (like Wheeler, I too was a big believer in WiMax) or final expressions of what I would have done as Chair of the […]

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