Nortel Kills Mobile WiMax Biz

Nortel Networks Ltd. has killed its mobile WiMax OEM deal with Alvarion Technologies Ltd. (Nasdaq: ALVR) less than nine months after the deal was publicly announced. (See Nortel Flunks WiMax.)

"Nortel announced today its intention to end our strategic agreement with Alvarion for mobile WiMAX solutions and effectively exit the mobile WiMAX business," the company said in a statement released late Thursday afternoon.

The statement continued: "We believe that narrowing Nortel’s strategic focus in wireless will help position the company for long term success as we work to put Nortel on sound financial footing once and for all."

The company says that the ending of the mobile deal will not affect its fixed WiMax portfolio.

Alvarion, meanwhile, says that as a result of the foregoing, it will not be able to recognize approximately $2.4 million of revenues from the sale of products to Nortel during the fourth quarter of 2008. Accordingly, total revenues for the fourth quarter are expected to be approximately $70 million, at the low end of the company’s revenue guidance of $70 million to $78 million.

Dell'Oro Group says that Samsung Electronics Co. Ltd. (Korea: SEC), Motorola Inc. (NYSE: MOT), Alcatel-Lucent (NYSE: ALU), and Alvarion dominated the mobile WiMax market in the fourth quarter. "Nortel had about 3 percent of the market," Dell'Oro analyst Scott Siegler tells Unstrung. In contrast, Alvarion grabbed a 15 percent share of the market with the exact same mobile WiMax equipment that Nortel was re-branding, while Samsung led the pack with a 22 percent share.

Nortel says that Alvarion will now take care of its unlucky 3 percenters. "Nortel and Alvarion are working closely together to transition Nortel’s mobile WiMAX customers to Alvarion," the company said in a statement.

The unceremonious flight from mobile WiMax also leaves startup WiChorus Inc. in a similar boat as Alvarion with its WiMax-related OEM deal. (See Nortel Fleshes Out WiMax Strategy.) "Any direct business comes back to us," explains Rehan Jalil, president and CEO of WiChorus.

Not that there is a huge amount of Nortel business to cover: "There were some trials and small deployments," Jalil elucidates. For its part, Nortel says it will focus on Long-Term Evolution (LTE) as a better fit for its customers. "We are in trials with Verizon and T-Mobile and have won a contract to provide LTE core to KDDI in Japan (with Hitachi)," the company statement says. (See Nortel Snares LTE Core Deal.)

— Dan Jones, Site Editor, Unstrung