Ericsson Pulls WiMax Plug

Networking giant Ericsson AB (Nasdaq: ERIC) is pulling the plug on its development of WiMax to concentrate on upgrading the 3G cellular technology it favors for broadband speeds.

The company confirmed on Thursday afternoon that it stopped internal WiMax development efforts at the end of last year and is instead relying on a reseller strategy for the technology. "Right now, we don't work on a WiMax system," says Mikael Persson, manager of strategy and business development for WCDMA at Ericsson. "We've invested in the basic research, but we don't see the point in taking that final investment to prepare factories... because we don't see the volumes in the market."

He says Ericsson will continue to resell Airspan WiMax equipment.

"We want to focus our resources where we'll get the most bang for our buck. And right now, there's no bang at all putting it into WiMax," says Persson.

"HSPA is where the market is happening right now. I'm really puzzled by this. I don't understand how this market [WiMax] will survive."

Ericsson's worst nightmare is that big operators will decide to go for mobile WiMax instead of waiting for long-term evolution (LTE) to develop, which is the next technology upgrade. In fact, Vodafone Group plc (NYSE: VOD) CEO Arun Sarin issued a barely disguised threat to this effect at the 3GSM conference in Barcelona in February. Sarin expressed frustration at the slow pace of mobile technology development, saying that if LTE progressed more quickly, there would be no need to deploy WiMax. (See 3GSM: Mobile's Fear Factor.)

"We have to speed up LTE development," admits the Ericsson man.

By relieving itself of any WiMax research and development, Ericsson will now focus on LTE for 4G. The vendor claimed to have the world's first LTE demonstration at the 3GSM show. (See Ericsson Demos at 3GSM.)

Ericsson was skeptical of WiMax from the start and concerned that it might cannibalize its core WCDMA business. It was the last major vendor to join the WiMAX Forum , in December 2004. It is still listed as a principal member on the Forum's Website.

At that time, Ericsson positioned WiMax as a complement to DSL for wireline operators and was determined to keep the new wireless technology at arm's length from its core WCDMA mobile business. The vendor told Unstrung then that it did not see WiMax as a mobility solution. (See Ericsson Cool on WiMax, Ericsson Hovers on WiMax, and Ericsson Joins WiMax Forum.)

As of June last year, Ericsson was still not committing to mobile WiMax, unlike many of its peers, including Nokia Corp. (NYSE: NOK), Nortel Networks Ltd. , Motorola Inc. (NYSE: MOT), and Samsung Corp. . The vendor said its WiMax development would focus on "fixed-nomadic-portable" applications based on OFDMA in the 3.5GHz frequency band.

— Michelle Donegan, European Editor, Light Reading, and Dan Jones, Site Editor, Unstrung

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