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Seybold: Intel's WiMAX Exit Strategy?
Rumors are swirling around the analyst community that Intel is losing its patience, and money, with WiMAX. Some believe that it is looking to pull the plug on its involvement as it has done with other wireless initiatives. Now comes a statement by Sean Maloney, Executive Vice President, General Manager for Sales and Marketing, that LTE and WiMAX should be combined into a common 4G standard. While he is not the first one to suggest this--it was suggested by Arun Sarin, CEO of Vodafone more than a year ago--it is clear to me that this is the beginning of Intel's exit strategy for WiMAX. Once again, an industry that has grown up around Intel is likely to be stepped on as Intel heads for high ground.
Maloney makes a couple of statements that need to be addressed. The first is that WiMAX and LTE are 80 percent the same but WiMAX is a few years ahead of LTE, and the second is that customers will be confused by competing 4G technologies.
Let's look at these statements in reverse order. First, we have had 2G and 3G competing technologies for many years and the industry has not confused anyone. And, I maintain, because we have had these competing technologies, we have lower service pricing, a more competitive landscape that has resulted in faster data speeds on both sides and substantially lower handset prices.
If the entire world had been using one 2G and one 3G standard, I am not sure we would be as far advanced as we are. And the companies that develop chipsets (I thought Intel did that, too) have been really good at turning out chipsets that support all of the various 2G and 3G technologies, on all of the major spectrum allocations around the world. For the most part, these chipsets are selling at very reasonable prices that will continue to decline.
Second, Maloney is forgetting about another 4G technology: UMB. UMB was developed by the 3GPP2 and Qualcomm--it was supposed to be the 4G road for the CDMA community. However, Verizon Wireless has opted for LTE, which means UMB will probably not be a factor. BUT--from what I understand--UMB is further along in its development than either LTE or next-generation WiMAX and until Intel raised its hand I would have said that LTE and UMB would probably come together into a common standard.
Now Intel has announced that it is getting back into the wireless mobile device chipset business after selling off its last effort in chips and not concluding its initial deal with Nokia. At the same time, it is sending up this trial balloon about combining WiMAX and LTE.
When I first talked with Intel about CDMA and GSM/UMTS, its representatives did not want to have to pay intellectual property fees to the "owners" of the technologies and therefore embarked on the WiMAX path. Now WiMAX, it turns out, will not be IP-free and Intel has a huge investment in a technology that is being built only in greenfield (meaning new) networks. WiMAX has not been included in anyone's migration path from 3G UMTS or CDMA.
Sprint is basically saying it will let Clearwire take over the burden of launching the WiMAX network and getting the devices to run on the network. But Sprint is keeping the voice and EV-DO traffic while the WiMAX network is being built out so it can get back to trying to save its core business.
The CEO of Intel seems to think is it easier to add wireless to a computer than to add a computer to a wireless device. Well, perhaps a few years ago that was true. But today we already have a number of very successful devices on the market--RIM's BlackBerry, phones using Microsoft Mobile Windows 6.0, Palm Treos and Nokia high-end phones (which the company calls wireless computers)--all coming from the wireless world with more exciting things on the way. This is just the beginning. Now there will be mobile processors in the market that will provide all the power new mobile devices will need and all the wireless connectivity they can fit in before anything Intel can produce and, I suspect, at lower power than Intel's first new offerings.
So Intel is beginning to make the move I thought it would. How will it exit the WiMAX marketplace gracefully and join the rest of the wireless world as it continues to grow? The answer, of course, is to champion the "merger" of WiMAX and LTE for the "good of the industry" and so we won't confuse the customers (who don't care about the technology anyway).
Can Intel thrive and survive in wireless when it is using the same technologies as the rest of the world and not promoting something different? Can its chips designed for handheld wireless computing devices compete with what is coming from the wireless industry? Time will tell of course, but Intel will have to horse trade some of its own IP in order to be able to develop LTE products or it will have to pay, just like every other chip maker. That is a fact of life in the industry.
Intel certainly wants to get into the wireless business, but so far it appears as though the master of PC processors has not mastered the wireless landscape and is still flailing around trying to figure out how to make its presence felt.
I don't feel the least bit sorry for Intel, but I do feel very sorry for the WiMAX community that was in place prior to Intel's entry and that grew up around Intel's support of the WiMAX technology. Many of these companies invested a lot of time and money because they believed that following Intel could only ensure their success. I wonder how they are feeling today, after Intel's latest round of comments.
Andrew Seybold is an authority on technology and trends shaping the world of wireless mobility. A respected analyst, consultant, commentator, author and active participant in industry trade organizations, his views have influenced strategies and shaped initiatives for telecom, mobile computing and wireless industry leaders worldwide.
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Comments
Posted by H. Jones | June 5, 2008 - 12:32pm
So, Andrew - what about the $1B investment Intel just made in Clearwire? Do they just have that much to throw around as a way to make their previous investments not look bad? Or does the left hand not know what the right hand is thinking? Either way, not good for Intel. Would love to hear your thoughts on the recent big Clearwire investment as it relates to your thoughts above.
Posted by Anonymous | June 5, 2008 - 12:54pm
Inyel is doing GOOD. Intel is not just a WIMAX company. It is an open wireless architecture (OWA) company suporting WiMax, LTE, WiFi and other RTTs. See the recent World Wireless Congrees (wirelesscongress.com) in San Jose, Intel presented that "OWA is our Future and we will target it in long run" by Rama, the CTO of mobility group.
Posted by Anonymous | June 5, 2008 - 12:55pm
Intel is doing GOOD. Intel is not just a WIMAX company. It is an open wireless architecture (OWA) company suporting WiMax, LTE, WiFi and other RTTs. See the recent World Wireless Congrees (wirelesscongress.com) in San Jose, Intel presented that "OWA is our Future and we will target it in long run" by Rama, the CTO of mobility group.
Posted by Andy Seybold | June 5, 2008 - 1:34pm
Mr. Jones, or H, first of all thank you for putting you name on the posting, it carries more weight with me when you do.
As for their investment, I am sure taht when the new Clearwire was put together they felt as if they had to invest again, they had invested heavily in Sprint's WiMAX efforst, as well as Clearwires--and I am sure taht they were reacting just as any venture fund would, "we have to protect our investment so we need to put more money in", on the other hand I believe, from what I have learned, that many within the company believe that they are not going to see the results they expected for the money they have spent and are floating a trial ballon to see what happens--and it won't be the first time a company has done that--and I think that handing over that last $Billion might have gotten some attention at the very upper levels of mangement--after all, Intel makes money selling chip sets--and when they fund projects it is with the expectation that the project will help them sell chips sets--just as Googles investments are about acquiring more eyeballs to keep their advertisers paying--so time will tell but I believe that the future will prove me correct--Intel has had enough and is looking for a graceful way to bail--and combining LTE and WiMAX for the "good of the industry" will probably be that way--as I said that does not help the companies who have trusted Intel to help them have a bright future in WiMAX, by the way, it would not take very much additional money to convert Clearwire to a LTE technology, the back-ends are both all IP so only thing that needs to be changed are the radios.
Andy
Posted by aseybold@andrewseybold.com | June 5, 2008 - 1:42pm
Well, Anonymous, looks as if you posted twice and if your comments are based on a single presentation by Intel's Mobility CTO I can show you 10 or 15 other presentations they have made over the years about wireles and how they are going to play in it--and each one is different and each one reflects they ideas at the time. OWA does not mean much--there is IP invovled with LTE, just as there is with GSM, CDMA, so show me Intel's Royalty agreement for LTE and,in fact show me their Royalty agreement for WiMAX mobile, Intel wants to play--of that there is not doubt but they also don't want to have to pay to play which is what WiAMX was all about and I will bet that they believe that by combining WiMAX with LTE they can "trade" some IP so that they can develop LTE without having to pay royalties--within the GSM community many of the players horsetraded patients and get GSM for free, but new comers pay a LOT for the IP, in the CDMA world, you need an agreement with Qualcomm, but once you have it, it covers ALL of their patents, including any they might have on WiMAX (and I don't know if they do or not), the issue is, to me, that Intel found out they could not make the rules this late in the game so they are trying to change the rules.
Andy
Posted by Lawrence Jackowski | June 6, 2008 - 1:18pm
Andy, wouldnt this present an opportunuty for 'another' chip set mfgr?
Posted by Anonymous | June 6, 2008 - 4:47pm
I disagree with almost everything in this article, but lets just say the IEEE and 3GPP worlds can agree and come together and work out all nuances of the differences in IP between the two technologies and they actual do merge 802.16m and LTE-Advanced. How would this leave the WiMAX ecosystem hanging? Wouldn't chipset vendors who have worked hard to make MIMO-enabled OFDMA chipsets (and who are undoubtedly all looking towards LTE and combination WiMAX/LTE chipsets) benefit from this? Why would they suffer? They would have a much larger market to sell into.
Also, any 4G technology will be used in a variety of mobile devices including consumer electronics. Distinguishing between wireless devices with an application processor and processor-based computing products with wireless will become (is already becoming) completely irrelevant.
Posted by Andy Seybold | June 10, 2008 - 10:23am
O--two more Anonymous contributors--the first one about oppotunities for chip set companies? Well if Intel joins the fray we will have about 6 chip companies which will be doing LTE, so perhaps there is room for more but most of the chip companies already have nailed down the major suppliers of ODM devices, and are also in hot pursuit of the consumer appliance folks--so perhaps is my answer--
Now on to Mr. Anonymous #2--who does not believe anythign I have said in the article about the WiMAX community, as a whole suffering because WiMAX merges with LTE--try this, go to the WiMAX Forum web-site, look at a list of member companies, their size, they status, and their products and then tell me how many of them can complete against Broadcom, Qualcomm, TI, Intel, and the others who are already in this space for chips, and then tell me how many of them can survive by going head to head with Alcatel-Lucent, Nortel, Nokia-Seimans, Ericsson, not to mention the two or three Chineese suppliers who have making in-roads around the world with great products, I suppose the Alvarion's of the world will survive, but the small companies who have put their entire heart and soul into WiMAX beleiving in the opportunity presented by Intel?
Andy
Posted by Alex Alexander | June 12, 2008 - 10:56am
Sure, Intel just gave Clearwire another $1 billion and keeps giving money around the world, and has just finished their mobile WiMAX chipsets to go into laptops and other devices to now exit. Yep, sounds like a plan to me! I also flush my money down the toilet because I enjoy watching it go down.
Intel is most likely saying, WiMAX and LTE should merge before the second generatioin WiMAX comes out in a few years. They would be stupid to say, "wait 3 years to merge with LTE."
Posted by Alex Alexander | June 12, 2008 - 11:22am
Clearwire says 30 million customers in nine years. No Intel exit strategy. I can promise you that! To say they are losing patience is ridiculous... they are only delivering the WiMAX chipset now to computer vendors.
sprintconnection.kansascity.com/?q=node/646
Posted by Anonymous | June 12, 2008 - 7:19pm
Dear Andrew, in your article you refer to the statements made by Sean Maloney. Can you please identify the source from which you took those statements?
Many thanks.
Posted by Alex Alexander | June 13, 2008 - 7:45am
I also saw that quote from him suggesting LTE and WiMAX should combine. But think about this for a moment. Intel has spent billions to get WiMAX networks up & running and also to get their WiMAX chipsets ready for laptops and other portable devices. Why would they bail now when they are ready to start selling WiMAX chips? Intel's VP of Marketing & Sales would like to see LTE and WiMAX merge, yes, but not for 3-4 years when it gives consumers yet another reason to buy more laptops and devices with the merged chips in them. LTE won't be around until then anyhow. But if they started merging the technology now, the merged chip would be available by then. It will probably happen eventually.
Posted by Alan Weissberger | June 29, 2008 - 9:36pm
Intel's response to Andy Siebold's article (which suggested Intel would be "pulling the plug" on their WiMAX investments):
Chris Siems of Intel provided a few links as a reference response to Seybold’s article:
1. Blogged response from Siavash Alamouti, Intel Fellow and CTO:
2. Harmonization article in WiMAX Vision:
We are expecting an update from Chris and Rama Shukla on Intel's MID initiatives to be posted on the IEEE ComSoc-SCV Discussion Group email reflector. All IEEE members are invited to join our ComSoc Discussion Group. Instructions for sign up are at our web site: IEEE ComSoc-SCV
My opinion is that WiMAX will only succeed if new MIDs, with great price performance and Internet video experience are successful!
Posted by Alan Weissberger | June 29, 2008 - 9:37pm
Intel's response to Andy Siebold's article (which suggested Intel would be "pulling the plug" on their WiMAX investments):
Chris Siems of Intel provided a few links as a reference response to Seybold’s article:
1. Blogged response from Siavash Alamouti, Intel Fellow and CTO:
2. Harmonization article in WiMAX Vision:
We are expecting an update from Chris and Rama Shukla on Intel's MID initiatives to be posted on the IEEE ComSoc-SCV Discussion Group email reflector. All IEEE members are invited to join our ComSoc Discussion Group. Instructions for sign up are at our web site: IEEE ComSoc-SCV
My opinion is that WiMAX will only succeed if new MIDs, with great price performance and Internet video experience are successful!
