Hi, Rob - "What will force the floodgates open will be the combination of pent up consumer demand and the commercial availability of low cost, low hassle systems - an "offer you can't refuse"."
Rob, with respect, I question the validity of these assumptions. These are the same assumptions that seem to underlie the content of these Cahner’s In-Stat Reports.
Up until about a month ago, I still attributed truth to these reports. Doing some research on the wireless industry one night, I chanced upon an old article about LMDS. As I read it, with the "projections" and the diagrams (complete with cellular architecture, no less) I began to experience deja vu all over again. I then did some searches for old LMDS reports by these 'research' companies - they're still out there, and they still glow. Looking at the wreckage of LMDS, and the huge pile of money that was lost by investors in that pipe-dream, I began to experience some doubt.
Because, in truth, I had been accepting the accuracy of the projections in these "reports". That accuracy was fundamental to my investment. After all, on two occasions, once in Canada, here, on an important vote, more recently in the US presidential elections, hadn't they got it right? In both cases, they said it was "too close to call". Many other cases have verified to me that these surveys, properly done, can be reliable.
You will be aware, Rob, of the more recent projections for 3G, by the same "research" companies.
But investments in either LMDS or 3G have been ruinous. So what's going on?
Now, I question the whole concept of "the Tornado". I have seen the term used by the CEO of Wi-LAN, and by Cisco. It is almost an article of faith in wireless circles.
I am sorry to say that IMO the "confluence of technological factors, and the upwelling of demand" is at best possible but is by no means certain - even after a recovery of capital markets.
"...commercial availability of low cost, low hassle systems - an "offer you can't refuse". We are nearing saturation in many markets for new technology.
The primary driver in your quoted statement is demand. Demand will cause economies of scale that drive prices down: that's the thinking. The problem with that circular argument is that if demand falters, the whole virtuous circle begins to fall apart.
For an investor in any particular company, the question becomes whether or not that company can, by virtue of some aspects of its business plan, gain significant market share at a profit.
This is going to be a highly competitive segment of the sector. If demand falters, if any one of the predicted bases for The Tornado fails to materialize, the effect on margins will be brutal. The consequent effect on any given company's share value will also be brutal.
I might add that while people are diddling away time on 802.11x, 802.11b is stealing a lot of market share. People who have recently invested $1000 on a wireless LAN are going to be resistant - there will be inertia - to purchasing and installing newer, more capable equipment. I'm not saying they won't do it, only that they will wait until they have to.
The infatuation of people with the New Thing, of being locked into the Upgrade Cycle, is over. Companies, and people, are looking at upgrades with squinty-eyed disfavour, now.
In the end, I question the assumptions underlying The Tornado. I consider them possible, but certainly questionable.
Insofar as The Tornado underlies the viablity of a wireless investment, and the "reports" of these "research" companies validate the investment, I say "Look out!"
Best regards,
Jim |
