All Maxed Out?
By BILL ALPERT
online.barrons.com
WHERE'S WIMAX? The high-speed wireless technology was billed as the cellular killer -- faster and cheaper than the cellular technology sold by vendors like Qualcomm (ticker: QCOM). But as cellular operators roll out "third-generation" networks, WiMAX is still trying to get out of the testing lab.
Cellular boosters snicker that 3G cellular is proving to be the WiMAX killer. Earlier this month, Sanford C. Bernstein analyst Paul Sagawa issued a scathing report that dismisses WiMAX as a stillborn rival to 3G. By the time WiMAX is ready to challenge 3G in 2008, says Sagawa, 3G will be faster, cheaper and selling in volumes of more than 300 million units a year.
"WiMAX has been hyped to the max," writes Sagawa, "but its likely impact on the mobile communications market is negligible." The Bernstein analyst reiterated his Outperform ratings on the cellular suppliers LM Ericsson (ERICY), Nokia (NOK) and Lucent Technologies (LU). Ericsson could rise from its recent 35 to 45, while Nokia could rise from around 16 to 29 and Lucent from about 3 bucks to 4.
Storming Out: Apple won an analyst's upgrade, while Qualcomm raised earnings guidance. But database sales slowed for Oracle. Investors hunkered for Hurricane Rita. The Nasdaq ended Friday at 2117, down 2% for the week.
Cellular vendors happily agree with Sagawa's thesis. The speed upgrades offered by 3G operators like Verizon Wireless -- the joint-venture of Verizon Communications (VZ) and Vodafone Group (VOD) -- and Sprint Nextel (S) make WiMAX unnecessary, says Randy Battat. He heads up Airvana, a Chelmsford, Mass., firm that enables Qualcomm customers to link their radio towers with thrifty Internet technology. At a San Francisco tradeshow Tuesday, the cellular industry will demonstrate that 3G is plenty fast for services like music and television.
But WiMAX proponents say they're not dead yet.
"WiMAX is alive and well," says Scott Richardson, the general manager of the broadband wireless business at Intel (INTC). Standard-compliant gear should appear around year end. The developing economies are ripe markets for WiMAX, he says. Thursday, Intel announced plans to install the technology in Southeast Asian nations like Malaysia, Thailand and the Philippines.
As it happens, cellular vendor Airvana delivers its products inside cellular gear sold by Nortel Networks (NT). And Nortel also has a WiMAX unit, run by Mark Whitton. He says he's overrun with inquiries from potential WiMAX operators who aren't cellular incumbents -- businesses with Internet content, or cable and satellite networks -- and have plenty of cash to challenge the cellular industry. Folks who say 3G will preempt WiMAX remind Whitton of people in the 'Nineties who saw no need for new cellular entrants like Sprint.
The first big clash will take place next year in South Korea, when a variant of WiMAX becomes available as an alternative to that nation's widely used 3G cellular services. "WiMAX and 3G are aimed at the same place," says Nortel's Whitton, "and it's too soon to call."
|
