Senza Fili Consulting on QUALCOMM and Flarion
>> Qualcomm Enters the Fray
The Quarterly Telegraph
Senza Fili Consulting
August 2005, Issue 4
tinyurl.com
We are all used to the thick stack of daily news about 3G and WiMAX these days, but the news about Qualcomm’s acquisition of Flarion stands out for the wide ranging implications it will have on the cellular and BWA markets alike.
Strategically, the acquisition is eminently sensible for both Qualcomm and Flarion. Qualcomm gains a powerful weapon against the threat of WiMAX, while strengthening its work on OFDMA, which has been chosen for Media FLO. Indeed, the acquisition represents an implicit acknowledgement by Qualcomm of the crucial role of OFDMA, which might eventually become an alternative to CDMA.
Flarion, on the other hand, stands to benefit greatly from Qualcomm’s muscle and relationships with mobile operators in establishing FLASH-OFDM in the marketplace. While collecting excellent reviews for its network performance during its Nextel trial in North Carolina and in other trials, Flarion found it difficult to get potential customers to commit to a proprietary solution, at a time when WiMAX promised interoperability across vendors.Arguably the largest implications of the acquisition will be for a party that the Qualcomm press release does not even mention: mobile WiMAX. To date, 3G technologies have been the only credible competitor to mobile WiMAX(¹). With Flarion’s acquisition, WiMAX gains a new powerful competitor: Qualcomm.
(¹) In terms of deployments and services offered, 3G and WiMAX may be largely complementary, but they do compete for the same financial resources: if mobile operators decide to spend on one, they are less likely to spend as much on the other. Here we are here talking about mobile access. Mobile WiMAX can also be used to provide fixed access services (e.g. DSL or cable modem replacement) and we believe that this will represent a larger market and a market in which WiMAX will not be in competition with 3G.
The importance of this can hardly be underestimated. Performance and cost of deployment for 3G technologies -- like HSDPA and EV-DO Rev A -- and WiMAX are not sufficiently different to convince mobile operators to switch from 3G to WiMAX in the mid-term. The easier path to an IP-based architecture and the use of OFDMA, however, give WiMAX an edge over 3G in the long term.
Flarion’s FLASH-OFDM, like WiMAX, is an all-IP, OFDM-based technology. The new competition from Flarion/Qualcomm will strike closer to home. It will be more difficult for both the WiMAX and the Qualcomm camp to claim superiority from a technical standpoint. (In fact, during their August 11 conference call, Qualcomm suggested that WiMAX and Flarion’s FLASH-OFDM may share some intellectual property, which belongs to Qualcomm’s portfolio now.)
WiMAX has substantial advantages over Flarion/Qualcomm: a standard-based technology, wide industry support, and a vendor-neutral certification process in place. But Qualcomm will try its best to counter them. In the conference call this morning, Qualcomm pledged its commitment to standardization.
Qualcomm’s standardization efforts are likely to go through 3GPP and 3GPP2, which have already started to work on OFDM, as a potential successor of CDMA. WiMAX proponents are also focusing on 3GPP and 3GPP2, aware that a 3GPP or 3GPP2-sanctioned technology is almost a requirement for most mobile operators. The battle, however, is still open, as the work on OFDM within 3GPP and 3GPP2 is only beginning. With Intel and Qualcomm solidly anchored on their respective positions and with their reputation at stake, we can be assured that it will be an interesting fight. <<
- Eric - |
