HR: Big Changes in Store for WiMax

NEW YORK -- First-generation broadband wireless equipment based on the emerging WiMax technology standard will start shipping commercially in 2005, but many smaller vendors may not survive long enough to reap the rewards of WiMax's arrival, according to a new study released today by Heavy Reading (www.heavyreading.com), the market research division of Light Reading Inc.

The report, WiMax Reality Check, analyzes the current state of technology and market development for this latest incarnation of broadband wireless technology. The report is based on information collected from and interviews conducted with more than 100 technology suppliers, service providers, and investors with a direct interest in the WiMax market.

Based on current schedules for interoperability testing conducted by the WiMax Forum trade group, the first commercial versions of WiMax products should be available by mid 2005, with market leader Intel Corp. leading the rollout charge, according to Heavy Reading. The first WiMax products will focus on fixed broadband applications, with products aimed at portable and mobile networking appearing in 2006 or later.

Heavy Reading expects WiMax to be a significant force in the emerging fixed/mobile network convergence sector later this decade, but the report concludes that the combination of a relatively long lead time for technology and market development, an overcrowded supplier market, and significant early price pressures will lead to a high attrition rate among WiMax components and systems vendors.

Other key findings of the report include:

WiMax will debut as a way to deliver fixed services before expanding into portable and finally mobile services. Initial uses of WiMax will be focused on backhaul connection of network access points to wireline infrastructure. The most obvious use of WiMax in this context is for connecting 802.11 "hotspots" to wired networks, but WiMax will also be deployed for backhaul connections of DSL-type services offered by competitive local exchange carriers looking to bypass incumbent-owned wireline networks.

Whenever it arrives, WiMax will be a critical network technology force for a long time. Backers have learned from the mistakes of earlier broadband wireless efforts, and they've taken important steps toward avoiding such problems as interoperability and business-case-annihilating overhead. Second, WiMax promises a better-performing, less-expensive alternative to many technologies that already serve its target applications. Finally, although competition will be fierce on the equipment side, it will quickly drive down costs for users and service providers, in turn improving the chances that WiMax will be much more than a niche play.

For competing technologies, WiMax will be more friend than foe – at least initially. WiMax will be a viable option for applications such as 802.11 "hotspot" backhaul and for extending broadband to areas that can't be served by wireline DSL infrastructure. But toward the end of this decade, as WiMax's footprint grows and its costs drop even further, it could begin to displace cellular and 802.11. And in areas where the copper infrastructure is still in the midst of being upgraded for DSL, WiMax could compete because both technologies will be in the early stages of their fixed-cost amortization curves.

Equipment pricing is still in flux, but it's already clear that pricing pressure will be significant at the market's start and will only increase. Estimates for WiMax base stations vary significantly, from $10,000 for a bare-bones model to $150,000 for full-feature units, and some vendors say the top-end estimates have already fallen by half. On the customer premises equipment side, the consensus is that the initial crop of devices will be in the $250 range and quickly fall to $50 in subsequent generations. Pricing pressure will winnow the field of WiMax vendors, particularly those already on shaky financial ground.

WiMax Reality Check, a 43-page report, is published in PDF format and costs $3,495. The price includes an enterprise license covering all of the employees at the purchaser's company.

For more information, or to request a free executive summary, contact:

Dave Williams
Sales Director
Heavy Reading
415-293-8470
[email protected]


Press/analyst contact:
Dennis Mendyk
Managing Director
Heavy Reading
201-587-2154
[email protected]


About Heavy Reading
Heavy Reading is an independent market research organization offering quantitative analysis of telecom technology to service providers, vendors, and investors. Its mandate is to provide the comprehensive competitive analysis needed today for the deployment of profitable networks based on next-generation hardware and software.