Analysts flag smaller CDMA network players as possible acquisition targets for the Finnish behemoth
December 2, 2003
With just 23 shopping days left 'til Christmas, industry analysts are speculating furiously about what might be in Nokia Corp.'s (NYSE: NOK) letter to fellow countryman Santa Claus.
So far, Code Division Multiple Access (CDMA) infrastructure players Airvana Inc., AirWalk Communications Inc., and InterWave Communications International Ltd. (Nasdaq: IWAV) are the names bubbling in the rumor pot.
The specter of a Nokia acquisition attack was raised last week by the vendor's surprise admission that it is considering a move into the CDMA network world – despite being traditionally associated with a market-leading position in the European-backed GSM (Global System for Mobile communications) and UMTS (Universal Mobile Telecommunications Service) sectors (see Nokia Mulls CDMA Move).
Analysts differ over potential strategies for such a move, but all are agreed on one thing: The vendor will have to purchase a CDMA market player to have a chance of success.
"An acquisition would be essential for Nokia," comments Gartner Inc. principal analyst Jason Chapman. "Trying to build up from a non-starting position would be particularly tough."
With Current Analysis' senior wireless infrastructure analyst, Peter Jarich, stating that "it's unlikely Nokia would be able to acquire a market leader," it seems the vendor will be forced to target a smaller player. But which?
CDMA network startup Airvana is mooted by Unstrung's research analyst Gabriel Brown as a potential acquisition candidate. Founded in March 2000, Airvana builds Radio Access Network (RAN) infrastructure based on the CDMA2000 1xEV-DO 3G wireless standard and an all-IP architecture.
Brown cites its private status, combined with Nokia’s similar all-IP network philosophy, as catalysts for an acquisition (see Nokia Claims Intelligence and Trying to Do the DO). "An Airvana deal could make some sense on paper."
Such a move, however, would have to overcome Airvana’s relationship with Nokia rivals Nortel Networks Corp. (NYSE/Toronto: NT) and LM Ericsson (Nasdaq: ERICY), both of which have struck agreements with the startup to outsource development of an EV-DO module. These relationships, warns Brown, "would be a big hurdle."
As for Texas-based startup Airwave and Silicon Valley's InterWave Communications: "These vendors would be an easier acquisition to engineer [as opposed to an incumbent vendor]... and they look to be targeting some developing-world opportunities, which would fit in with a potential Nokia strategy," argues Current Analysis' Jarich (see InterWave Wins Iraq Deal and InterWave Wins in Nigeria).
A "spread-spectrum" digital cellular air interface technology mainly used in the U.S. and South Korea, CDMA operates in the 800MHz band and 1.9GHz PCS band and supports data-transfer speeds between 14.4 kbit/s and about 2 Mbit/s (in its latest 3G variants).
— Justin Springham, Senior Editor, Europe, Unstrung
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