WiMax: Optimism... and Caution

By Jeff Goldman

January 19, 2005

WiMax hype never seems to go away, but at least one analyst is recommending that vendors thing twice about 802.16 -- even when the WiMax standard is ready to interoperate between company products.

Two recent reports from research firms TelecomView and IDC offer slightly different perspectives on the potential market for WiMax technology. Both see the technology—now with another delay for true interoperability, according to America's Network — as extremely influential. In fact, the TelecomView report, entitled "Wireless Broadband: Will it Replace 3G and Fixed Broadband," suggests that WiMax could well present a significant challenge to other wireless technologies - and that's certainly how the vendors feel.

The IDC report takes a more cautious view of WiMax's potential.

"It's quite a bit more efficient than the 3G technologies, and it'll support higher subscriber bandwidths, which we think is important," says TelecomView Principal Analyst Bob Larribeau.

While 3G might offer greater mobility than WiMax at first, Larribeau says, WiMax's lower price and higher bandwidth will still make it much more attractive. "A lot of the applications, if WiMax wasn't there, would go to 3G," he says. "But I think it's also increasing the size of the market, because people will subscribe to a WiMax service when they would not have subscribed to 3G, because of the lower price."

In some cases, Larribeau says, WiMax might even be able to supplant wired technologies like DSL and cable. "I think for a significant class of users, it'll become preferable—people that are not that attached to the place that they live and don't want to have to change services every time they change apartments, for example," he says. "This allows them just to move and set up, and they're ready to go."

Still, Larribeau doesn't expect that WiMax will completely dominate the marketplace.

"Over the next five years, you'll see the services coexisting," he says. "In the longer term, you're going to see a convergence, so that Wi-Fi and WiMax and 3G will become ways of implementing services that carried across all three—you just can't have people subscribing to every new technology that becomes available."

The IDC report, entitled "Worldwide WiMax Semiconductor 2004-2008 Forecast and Analysis: New Markets Show Potential," also sees WiMax as having a significant impact on the marketplace—but not in the short term.

"By 2008, we don't see it really hitting any sizeable volumes that would be an opportunity for chip vendors or equipment vendors," says IDC analyst Ken Furer.

IDC breaks the WiMax market down into three main categories: fixed wireless broadband for emerging and rural markets, wireless LAN hotspot backhaul, and laptop or handheld mobility with 802.16e. Both hotspot backhaul and emerging and rural markets, Furer says, present relatively small niche opportunities that aren't likely to justify the cost of implementation.

If Intel backs 802.16e, though, Furer says laptops and mobile devices could present a significant opportunity. Still, he notes that the mobile 802.16e standard hasn't yet been finalized, and that a number of other fixed wireless technologies could still compete with WiMax in that space. "We're seeing more momentum on the service provider side for 3G right now," he says.

802.16e is not expected until well into 2006, maybe 2007. But waiting for a standard that interoperates hasn't stopped many vendors from putting out products already that they call "pre-WiMax" with all the same features as WiMax— even if they won't be upgradeable to the final WiMax when testing is done.

The main aim of the IDC report, Furer says, is to urge chip vendors to be cautious in considering WiMax. "Chip vendors should keep a closer eye on service provider support to see if this is something that will even be a potential market," he says. "We're on the side of the companies who are saying, 'Look, we have capabilities and we could do this—but we want to make sure that there's a market opportunity.'"

Over the long term, though, Furer's almost as optimistic as TelecomView's Larribeau—particularly when looking at 802.16e, which isn't likely to arrive for a few years. "It just may be too early for that side of the market yet," he says. "So we're not saying that WiMax is not going to happen—we're just saying there's a lot of hype right now, and we think vendors need to keep a close eye and wait and see."

Originally published on .

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