How the “Intel (IC) Factor” Impacts Wireless Broadband Convergence

ARTICLE

How the "Intel (IC) Factor" Impacts Wireless Broadband Convergence

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

As recently as January, 2008, Intel CEO Paul Otellini says that WiMAX is key to next generation of Internet and an important way forward for the company . Intel has spearheaded development of a large ecosystem comprised of over 500 member companies including component, services and equipment suppliers, operators, consultants and support companies. But growth of the fixed version of WiMAX have not lived up to some of the early expectations and the time frame for certifications of the mobile version have lagged by several months from initial projections. Compared to adoption rates of other major consumer, computing and communications technologies, WiMAX has fared relatively well. The challenge for WiMAX, however, is to grow to a size and momentum that can compete with mainstream mobile communications, consumer electronics, and computing developments for share of mind and sustained R&D and business development dollars. This takes growth to a scale and level of profitability that becomes viable to sustain participation of the members of the supply ecosystem.

Because of the predominant control of spectrum resources and over 3 billion subscribers, wireless broadband communications is often considered to stem from mobile voice networks rather than as an extension of wired and local wireless broadband network environments. But wireless broadband is different from voice because on a fundamental basis because it extends Internet and networked communications, applications, and organization and user expectations. The IT/Networking, Internet, and consumer electronics industries have developed their own sets of expectations for user participation, openness, and ownership that is different to the extent that it causes conflict with currently adopted 3G mobile supply and service business models.

One aspect of difference is in IPR regimen and royalty rates. One major impediment for participation by Intel, Broadcom and other IT/networking IC companies in 3G has been the unequal playing field created by dominance and structure of 2.5-3G IPR.

The open market "IC Factor" is a basis for WiMAX and LTE 4G personal broadband. The basic answer to 'Why WiMAX’ is that new generations of ICs can do the advanced wireless plus high powered processing needed for 'universal communications' from the desktop to small portable devices, and this more dramatically opens mobile markets to the domain of computing, Internet, software and consumer electronics. Wireless broadband is the predominant way forward to break down the roadblocks to global broadband connectivity and extend Internet, entertainment and computing.

Intel has also reached a cross roads: Intel's conglomerated central processor is very useful but has reached an end point as the fuel for creativity and productivity gains until it moves out to become mobile; the prime ingredient for being truly 'personal'. PCs are powerful personal repositories but are becoming less and less a factor in the advance of productivity and organizational gains or entertainment value. The vast majority of gains to be had come from detaching information and people from location.

The Intel IC factor is not just limited to WiMAX: In the long run, WiMAX could prove to be a Trojan Horse that opens up development and markets to broader participation and more open business methods. A quick look at the current scenario for development and adoption of WiMAX and LTE exemplifies the impacts:

Participant	Pre-WiMAX	Forward
Mobile Leaders	Market dominated by 3 suppliers working closely with operators to deliver closed networks. Emphasis on hardware.	Market shift to services and development of new revenues based on broadband. Expanding markets and competition pressure for inclusion from computer industry.
Merchant IC Suppliers	IPR barriers stall participation of non-vested merchant chip suppliers. Dominance by Qualcomm, TI.	Reduction in barriers to IPR are accelerated. IPR regimen for LTE is made more open/lower barrier to entry. Nokia shifts to licensing model, & several startups develop for both WiMAX and
Equipment Suppliers	Alternative WBB suppliers are disorganized. IPR and market granularity barriers to entry.	Increased number of suppliers of standards compliant, compatible solutions. ‘Best of breed’ supply chains for components and systems. LTE. Tier 1s move to integrated product & services beyond core networks.
Licensed Operators	Fragmented network development despite goals of UMTS. Delivery of broadband services is problematic.	Accelerated emphasis on collaboration of standards including IMS.

WiMAX plays out as part of the long term evolution of wireless networks that goes beyond early concepts for FMC, fixed-mobile convergence: The several year progression of wireless broadband to 4G recasts computing, Internet, consumer electronics, networking, and mobile wireless as the universal communications media. This broad trend calls for increased participation of the converging industry participants including Intel and other merchant chip vendors. Intel gains by being a champion of WiMAX by establishing themselves as a player in 4G, which has and will cause a favorable restructuring in IPR and business methods. Playing the ‘what if’ scenario, the ‘IC factor’ would most likely have played out without the development of WiMAX: as evolution of ICs and wireless technologies enabled low cost, pervasive personal broadband, major players in constituent industry segments were destined to become involved. Intel has seized on the importance of the WiMAX effort to champion the cause for merchant chip and other players in the converged ecosystem. 3GPP-LTE has thusly become much more responsive to the near term disruptive, long-term creative technology and market evolution.

WiMAXDay, January 8, 2008 (link)

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