NSN Backs Away From WiMax

As Nokia Networks prepares to revamp its mobile development strategy with the planned $650 million acquisition of Nortel Networks Ltd. 's key CDMA and LTE access wireless assets, the vendor has made another significant wireless strategy move -- it's scaling down its focus on WiMax. (See NSN Reveals Plans for Nortel's LTE and NSN Picks at Nortel's Mobile Bones .)

The Finnish-German vendor has decided to divert R&D resources away from WiMax to Evolved High-Speed Packet Access (HSPA+) and Long Term Evolution (LTE), and will no longer make its own standalone WiMax base station, but will rely more on partners instead, Marc Rouanne, head of radio access at NSN, tells Unstrung.

"We have already shifted a part of our resources away from WiMax to HSPA+ and LTE," says Rouanne. "We're looking for our suppliers and partners to deliver what we would have done ourselves in-house. A much larger part of the RF equipment will be supplied by our partners."

Rouanne declined to identify NSN's WiMax partners, nor would he specify the amount of R&D investment that has been moved into the next-generation cellular technologies. But he said that the changes in its WiMax strategy wouldn't involve any job losses.

Despite the decision, Rouanne denies NSN is exiting the WiMax market altogether.

"We're not stopping, cancelling, or getting out of the market," he says. "We still have a strong offering in WiMax."

At the WiMax World tradeshow in Chicago last year, NSN stated it had more than 20 fixed and mobile WiMax references.

It hasn't, however, made a significant breakthrough into the major U.S. WiMax account that everyone's watching -- Clearwire LLC (Nasdaq: CLWR). (See Clearwire Gearing Up for Dallas & Seattle? and Clearwire Goes Live in Atlanta.)

NSN hasn't yet made it into Clearwire's radio access network, but it does have a deal to supply the operator's subscriber data management system, courtesy of a deal with the former Sprint Corp. (NYSE: S) WiMax operation that's now part of Clearwire. (See Clearwire Considering WiMax Polygamy and Sprint Picks Nokia Siemens.)

NSN's retreat from WiMax is reminiscent of the vendor's decision to exit the GPON (gigabit passive optical network) broadband access business last year and shows that the vendor is prepared to take tough technology decisions. (See 'Run Away!' Nokia Siemens Retreats From GPON and Nokia Siemens Dumps on GPON.)

NSN says the reason for shifting its resources away from WiMax is that it has seen an acceleration in demand from its customers in the last three to six months for HSPA+ and LTE. This is also part of the reason for the acquisition of Nortel's LTE access assets along with the Canadian vendor's CDMA business. Rouanne says the impact on the overall wireless market of WiMax will be more limited and smaller than expected. (See NSN: Is Verizon on the Horizon?, Nortel's LTE Brain Drain, and Will Others Bid for Nortel's Wireless Assets? )

NSN isn't the only major wireless vendor to divert resources away from WiMax in favor of next-generation cellular technology developments: Alcatel-Lucent (NYSE: ALU) announced in late 2008 it was ceasing investments in mobile WiMax but continuing to develop fixed WiMax as a "wireless DSL" technology; and Ericsson AB (Nasdaq: ERIC) ceased its WiMax development efforts as long ago as late 2006. (See AlcaLu's New Vision: More Convergence and Ericsson Pulls WiMax Plug.)

So what impact will NSN's decision have on the overall WiMax market?

First, it provides a partnership opportunity for WiMax infrastructure specialists such as Airspan Networks Inc. (Nasdaq: AIRN), Alvarion Technologies Ltd. (Nasdaq: ALVR), Aperto Networks Inc. , and Harris Stratex Networks Inc. (Nasdaq: HSTX). (See Harris Stratex Snaps Up Telsima for $12M.)

Alvarion appears to be a likely option: It doesn't have any conflicting relationships, is well established as a proven WiMax vendor, and has experience (albeit short-term) of a major vendor relationship, having teamed up with Nortel before the Canadian giant imploded. (See Nortel Kills Mobile WiMax Biz and Alvarion Takes Nortel Hit.)

NSN's decision also makes the market a little clearer for rivals such as Cisco Systems Inc. (Nasdaq: CSCO), Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY), Huawei Technologies Co. Ltd. , Motorola Inc. (NYSE: MOT), Samsung Corp. , and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), as they compete for WiMax purchase orders. (See Huawei's Clearwire Ride?, Huawei Rakes In WiMax Sales, Sprint Picks Nokia Siemens, and Alvarion Lands Largest Gov't-Backed WiMax Deal.)

The WiMax market is set to grow steadily in the coming years, with the value of infrastructure and device sales set to grow from around $2 billion in 2008 to more than $4 billion in 2014, when there will be 75 million WiMax users worldwide, according to forecasts from Maravedis Inc.

— Michelle Donegan, European Editor, Unstrung

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