Business Cycles of Small WiMAX Companies: a Summary

ARTICLE

Business Cycles of Small WiMAX Companies: a Summary

By Robert Syputa, Senior Analyst
Contact the author at robert@maravedis-bwa.com

WiMAX is experiencing rapid growth; Maravedis forecasts WiMAX subscribers to grow to over 100 million in 2014 and for several new business opportunities to develop. Annual growth of over 100% over the next few years creates a fertile ground in portions of the value chain to support small to midsized businesses. You are familiar with many of these business segments but some will change or will have sprung up as new combinations of products and services. Despite the rapid growth, the competitive nature of WiMAX and LTE will make it a challenge to target R&D and achieve profitable product and service timing and scale. Scale is not just a matter of have sufficient size and scope of operations but also having the ability to quickly adjust operations to fit changing technology and market developments.

Business	Current Cycle	Key Opportunities	Challenges
WiMAX IC	Rapid growth, increased diversity and competition	Low power embedded Mobile Scalable Device Platform Multi-mode with 3G, LTE, Wi-Fi MU-MIMO, Co-MIMO, SDWN Integrated SoC	Rapid price/volume decline curve R&D Multiple RFs Multi-mode IP/IPR Short product lifecycle IPR Increased # of competitors
Pure Play System Supplier	Rapid growth, higher volume efficiencies Difficult to achieve profitability	Digital inclusion market Mobile WiMAXm Price elastic demand Efficient SDWN Partnerships Higher food chain	Tier 1 suppliers R&D Increased operation complexity Margins Rapid price/volume decline curve LTE & WiMAX+LTE competition WiMAX & LTE IPR
Tier 1 Infrastructure Suppliers	WiMAX small but growing. WiMAX helps push and aid LTE development	Integrated product-service offerings Hosted services: Micro-payments Search Mapping LBS & advertising Organization services Mobile web portal New spectrum and alternative operators Higher ASP mobile devices	Consolidation – Right sized Rapid R&D Diverse market pressures Rapid handset life-cycle and diversity. Application ecosystem including open source
Web Services Portal	Mobile a growing segment	Hosted services: Micro-payments Search Mapping LBS & advertising Mobile web portal Organization services	Tier 1 Intermediaries and competition Open access
Handset, embedded device supplier	More open WBB networks creates new opportunities and challenges	Specialized mobile devices Software-centric interface GPS-mapping Cameras/video	Global open competition Shifts in IPR Price competition

WiMAX IC
Very rapid advances in standards developments and increased pace of LTE has forced many WiMAX IC companies to provide support for both. Even as new competition enters, there is question that the current crop of suppliers will develop sustainable market share.

The ramp in volume starting in 2008 is slated to lead to first stage success for leading vendors. WiMAX will be a wild-west show of growth, development, and competition from all sides: both startups and involvement of an increasing number of mainstream chip suppliers.

The convergence between WiMAX, 3G, and LTE will produce interesting IPR hurdles and will probably pressure consolidation to occur in another 2-4 years.

Pure Play WiMAX
The rapid pace of technology evolution and convergence has accelerated product development while shortening life cycles. Increased competition and consolidation towards full-service telecommunications supply has increased consideration for tier 1 suppliers to further consolidate which possibly opens up possibilities for acquisitions occurring in 2009-10.

Recent pace of $5-$30 million U.S. RFPs has shown increased promise that pure plays may participate in tier 1-2 deployments.

Scale matters. The challenge remains achievable a profitable level of business and avoiding loss of market share to large suppliers.

Tier 1 Suppliers
Tier 1 suppliers face broadening of their businesses as consolidation continues and convergence and open global markets impact business structure. Tier 1s are increasingly concentrating on data and business operations as well as mobile devices and infrastructure supply.
A shift in underfoot to become mobile web portals and aggregators of phone environments, unified messaging, and web and location based services.

Handset Device Suppliers
Both opportunities and pressures abound:

Low-end device margins are contracting while increased competition for open devices originating from computing and entertainment electronics sectors is a heightened environment variable.

The trend among leading handset suppliers to closely tie handsets to GPS-mapping, LBS, (location based services), and improved OS and dynamic window interface displaces the emphasis on physical appearance and size as market determinants.

General outlook: We think that rapid changes will course through the industry over the next three to five years. Emergence of LTE and multi-mode base stations and devices and introduction of WiMAX has precipitated considerable reshuffling of internal operations and industry partnerships. Change among operators and suppliers will be dramatic.

For more information you can contact the author. robert@maravedis-bwa.com