The next piece of Clearwire LLC (Nasdaq: CLWR)'s infrastructure jigsaw puzzle was put in place Wednesday morning as startup WiChorus Inc. revealed that it has won a multiyear deal to supply packet core hardware and software to the mobile WiMax operator.
Clearwire has already deployed the WiChorus Smart 4G Packet Core system in multiple markets, although neither company is saying which cities. Running a flat-IP network, Clearwire needs packet core hardware and software to manage and prioritize the flow of everything from Web browsing sessions to video and -- eventually -- voice calls over its WiMax network.
"It sits behind the backhaul [and] controls a lot of base stations," Rehan Jalil, president and CEO of WiChorus, told Unstrung Tuesday in the process of trying to simply explain what packet core architecture is.
"The basic function is to terminate all the connections from every mobile device."
Simply put, packet core systems help operators to manage all the different types of traffic they can get on the one, big, dumb mobile IP pipe. This also means dealing with terminating the calls from what could eventually be a multitude of different devices over time. (See 4G Drives All-IP Mobile Networks.)
"It's not just about how fast you can forward packets," Jalil says of why his company won the deal over rivals like Cisco Systems Inc. (Nasdaq: CSCO) and Starent Networks Corp. (Nasdaq: STAR). But that obviously has some bearing, as Jalil also claims that WiChorus's products are five to ten times faster than competitors'.
The CEO says that the San Jose, Calif., company's concept of "flow-oriented architecture", which boasts features like line-level encryption, is what helped kick the company into pole position. (See WiChorus Nabs $18M in Funding Round.)
The packet core deal is the latest in a big news week for Clearwire and partners. The company announced a new CFO and strategic head on Monday, then went live with 10 more markets and detailed some of its plans for using broadband stimulus funding on Tuesday. (See Recovery Act: Clearwire Reveals Plans and Clearwire Shuffles Exec Deck.)
Absolutely, couldn't agree more with that. Working directly with the mobile service providers provides a wealth of opportunities and knowledge that can't be gained externally.
The good news for Clearwire is that they have picked an independent vendor that is not about to back away from the wimax market like some of the larger NEPs have to save R&D costs.
Reality for today is that 2 vendors (Ericsson and NSN) have almost 60% of the market, with Starent credible at about 15% and Cisco & Huawei making up another 10% or so. Huawei will clearly improve on that, simply by penetrating their home market and many of the network transformations in more mature markets. Expect them to be heading towards 20% or so and we mustn't forget ZTE too.
Cisco has done relatively well and some of their channels to market have dried up making it a more challenging sale. As you say there need to be some very compelling reasons to select a dedicated point solution and for now WiChorus appear to have something...
Will be fun to look at this again when we head off into the 5G packet gateway world :)
packet core becomes more strategic and important in all ip 4g networks, as there is no circuit switched component. all services go over it. this is the very reason it has become more important for operators to pick the right technology and not just what is being bundled for them by tems/neps. wichorus and starent are good examples of how independent packet core can prove its value to get selected by operators on merit and not based on bundling. 4g is now bringing new opportunity for new players
cisco tried packet core on a routing platform, with limited success in the last decade for that routing platform based packet core. so it does not guarantee success. key is to understand the mobile requirements, address the pain points of mobile operators dealing with new mobile broadband challenges, give them value and the rest are details...
I think also that EPC core is much more critical for all services as opposed to previoulsy where it was used to deliver wap browsing and some light web browsing. With the advent of the iPhone and USB 3G keys, mobile broadband is much more important to revenue generation and moving forward EPC core will be carrying the voice traffic as well, so it's much more significant. I believe that this extra significance is what's driving the improved growth numbers for mobile core.
The other aspect that is common place with the larger NEPs is they have the ability to subsidize core products with revenue generated from the RAN sales, so it can make it tough for an independent to compete. On top of that building a new dedicated platform as opposed to re-using an existing routing platform drives extra cost and can be sustained in the short term, but in the longer run higher speed I/O interfaces and switching capacity improvements benefit from the larger volume markets to fund that new R&D...
Its very ambitious for them to go after the biggest customer in this space, against all incumbents and established vendors. It makes them very interesting to get the top slot in this early independent 4G packet-core opportunity. Its a good proof-point. Their website talks about other technologies also.
That's a fair summation of where things are. One side effect of the market not being that big is that vendors have tended to under invest in it -- although that's changing as everyone gears up for EPC.
I'd add also that the mobile packet core market grew 10 percent last year. I'm forecasting seven percent this year, against a backdrop of a 10 percent decline in the mobile infrastructure market as a whole. I may even be over cautious based on how people tell me the year's gone so far.
Haven't we been here before ? Maybe I've been around too long, but I distinctly remember every vendor and startup chasing the 3G mobile gateway market. The only independent vendor to gain traction and relative strength was Starent, with others failing to penetrate, folding or being acquired before becoming successful.
The problem is the size of the market is simply not that big, with gateway products having a high session count and a low throughput/session (compared to fixed networks), means that not many of these boxes are required to deliver service. Throughput is increasing, but volumes will still be low. Starent survived by specializing in CDMA to start with, which allowed it to generate revenues and then expand markets, but there was only enough revenue for 1 vendor to survive. So perhaps it will be WiChorus for 4G with revenue coming from WiMax allowing it to challenge in LTE, but they will meet stiff competition from Ericsson and ALU for that market at least...
From what I've seen and heard about WiChorus it's an interesting company. I have some insight into its product plans for the mobile core. Very ambitious.
Any other opinions out there?
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