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Beware the Flying Phone!

LR Mobile Column
LR Mobile Column
LR Mobile Column
5/26/2004

Stop us if you've heard this one: A major wireless operator places a big order for next-generation base stations with a major vendor. Once installed, it turns out that those new base stations cover less geography than the equipment being replaced. The results are "black holes" in which users can't get access to high-speed data services. A meeting is called, during which an operator executive gets so aggravated that he throws a phone at one of the vendor's representatives.

The punch line? There isn't one. In fact, this story isn't even funny, when you stop to think about it (except, of course, for the bit about phone throwing). If anything, it's more like a next-gen wireless urban legend, an oft-repeated and possibly embellished story that ends up on a cautionary note. The moral of the story is that it pays to know exactly what you're buying.

The catch is that full information about wireless infrastructure isn't always easy to come by. That's one key finding from Heavy Reading's latest report, Next-Generation Wireless Infrastructure: A Heavy Reading Competitive Analysis. After spending the past three months analyzing the field of next-generation wireless infrastructure, I'm amazed by how much information isn't out there.

For example, take base stations: the cornerstones of every wireless network, but comparing them can be an exercise in frustration. In compiling detailed technical specs for all of the base stations currently on the market, I was amazed by the frequency of generic statements – such as the ubiquitous "high capacity" – that weren't accompanied by figures to back them up. Such chest-beating is to be expected in press releases and advertisements, but it doesn't serve any useful purpose when a potential customer is looking for hard numbers. It's also troubling: How can a vendor withhold such basic specs as upgradeability and capacity, especially when so many competitors are disclosing their information?

Granted, specs frequently change as vendors add features and support for the latest standards. But a constant state of flux is no excuse for fudging on specs, now that disseminating the latest information means a few minutes updating a Web page, rather than the time and expense of reprinting datasheets. Outdated information – or worse, no information at all – limits operator and investor visibility into a vendor's competitive position.

Such were the challenges faced by Heavy Reading as we circulated requests for information (RFIs) for more than 260 wireless infrastructure products, including base stations, gateway GPRS serving nodes (GGSNs), packet data serving nodes (PDSNs), and microcells/picocells. We asked nearly three dozen vendors to provide basic technical information for each product they sell. Responses were mixed: Roughly half agreed to respond directly to the RFIs, while the others directed us to use information from their Websites. Several didn't respond at all.

A few vendors – including LM Ericsson (Nasdaq: ERICY), InterWave Communications International Ltd. (Nasdaq: IWAV), and Siemens AG (NYSE: SI; Frankfurt: SIE) – do a fine job of providing at least the basic specs for most of their portfolios online. Others keep their cards closer to their vests. For example, if you're interested in LG Electronics Inc.'s Starex line of CDMA base stations, there's little beyond boilerplate: "LGE's systems fully meet the relevant CDMA standards and are designed... [with] flexible modularization.... You name it, we shall provide." That's nice ad copy, but it makes for a poor datasheet.

Some vendors play the trade secret card in deflecting requests for hard information about their products. One example is Hitachi Ltd. (NYSE: HIT; Paris: PHA), which responded to our RFI thusly: "Due to the NDA issues with our customers, we are not able to disclose your technical requests at this moment. I hope you would understand our situation about this product." I checked their Website, hoping to find at least some basic information; but for months, every time we clicked on the link that was supposed to provide information about Hitachi's CDMA 1xEV-DO equipment, the same message appeared: "We are soon ready to open new 1xEV-DO web site. Please contact to [email protected] for more information." Not so much as a list of available equipment, let alone basic specs.

Of course, it would be wrong to assume that a vendor that provides no detailed information or provides it only under NDA is trying to hide the fact that it has inferior products. But after a couple of quarters of poor sales – or worse, equipment that flounders after it's installed – nagging suspicions turn into an understanding of why this information is so valuable and so necessary.

Part of the reluctance to use figures rather than words (e.g., "high capacity") to describe a product stems from the fact that so many assumptions go into creating these numbers, for example a receive sensitivity figure of -125dBm. That's understandable. But it's not a stretch to assume that at least some vendors are concerned that their equipment doesn't measure up. "A lot of vendors don't want to see apples-to-apples [comparisons] out there, so I wish you good luck," warned Jon Hambidge, senior director of marketing at IPWireless Inc., early on in my research.

As it turns out, we did gather together enough apples to compare almost 150 different products by more than a dozen different criteria. The end result is a detailed comparative analysis that goes a long way toward measuring how next-gen wireless infrastructure products from different vendors stack up.

Wireless equipment makers that don't put their datasheets in plain sight are making a mistake. For one thing, although operators still use the RFP/RFI process to make buying decisions, overreliance on this round of information collection could cost sales. That's because RFPs/RFIs routinely stretch into hundreds of pages, and with staff cutbacks, operators have fewer people around to wade through vendors' responses. Hence the importance of making key specs publicly available, so that an operator can decide which vendors are worth the effort of an RFP/RFI.

For another, market conditions are changing. Pricing pressure is enormous. For example, the price of a Node B has fallen by more than half just within the past 12 months. The push to compete on price makes the case for disclosing as many key specs as possible. After all, a vendor that makes information publicly available is in a better position to justify prices capable of sustaining its business. If prices continue to fall, differentiation – including the basic specs to back it up – will be the only way to survive in a commoditized business.

And it might even save some sorry rep from having to dodge a flying phone.

— Tim Kridel, Analyst, Heavy Reading

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