Mathew Ingram says some alliances are crucial
by Mathew Ingram - Tuesday, December 7, 1999
Calgary -- Orthogonal frequency-division multiplexing (OFDM) is something only an engineer could love. At the
meeting of telecom and networking companies that Calgary-based Wi-LAN held in Santa Clara, Calif., last week to
try and develop an alliance on OFDM, the talk was about Fourier transform algorithms, peak-to-average ratios and
Doppler effects.
So, who cares? Judging from the turnout in Santa Clara, players like Lucent, Ericsson, Nokia, Sony and Intel care.
Investors in Wi-LAN care too -- since just around the corner from the hotel suite booked by the Calgary company,
networking titan Cisco Systems was telling analysts about its own similar technology, called vector-based OFDM.
Cisco has said it plans to launch some high-speed wireless products based on V-OFDM next year, with chips from
its partner, Texas Instruments.
When Cisco first announced its V-OFDM plans in October, the market seemed to assume the company might buy
Wi-LAN in order to get access to its patents on OFDM, and shares of the Calgary firm climbed as high as $45.
Later, when Cisco appeared to have rejected an invitation to the Wi-LAN meeting -- which sources say was a result
of confusion within the massive company -- Wi-LAN's stock fell (the shares closed yesterday at $37.85). In fact, a
Cisco executive, Peter Ecclesine, did attend the Santa Clara OFDM meeting.
Even before the Cisco announcement, there were indications that a Cisco buyout wasn't really in the cards. For one
thing, Cisco had talked to Wi-LAN about its OFDM plans as far back as last spring and nothing had come of it --
why would Cisco wait until its own announcement boosted Wi-LAN's market value to $600-million before deciding
to buy it? Cisco had also already placed its bets in the OFDM arena on a privately held U.S. company called Clarity
Wireless, which it bought last year, reportedly for about $150-million (U.S.).
According to one insider, there are different "camps" within Cisco Systems when it comes to dealing with OFDM.
One group decided to go with the Clarity technology (which forms the vector part of V-OFDM) and pulled together
the Cisco consortium behind the scenes before making its announcement. Another part of the giant networking
company, this source said, favours approaching the emerging OFDM business in much the same way Wi-LAN did
with its meeting -- by trying to form an industry-wide technology alliance.
Birger Kjellander, a senior executive with Ericsson who spoke at the Wi-LAN meeting, said emerging technologies
like OFDM need co-operation in their early stages between companies who in the later stages of development will
likely become competitors.
"We see that in certain cases we are partners, in others we will be competitors," Mr. Kjellander said. Cees Links, a
senior executive with Lucent Technologies, also said co-operation is required early on in order to agree on a
common technical standard.
Kursat Kimyacioglu, manager of wireless networks for Philips Semiconductor (a Wi-LAN partner), said the key with
a new technology like high-speed wireless networking is to get as many products out the door as quickly as possible
-- and to have those products work together seamlessly, even though they may come from different companies. One
company cannot establish an entire new technology market all by itself, he said, and "Cisco or any other company
may shoot themselves in the foot if they try to do that."
In many ways, several attendees said, the reports pitting Cisco against Wi-LAN in the OFDM race miss the point.
The technology behind OFDM has been around since at least the 1960s, but required computing power and
miniaturization that were still decades away. It also required some way of dealing with the so-called "multipath"
effects, or signal bouncing, caused by the process. Cisco's vector technology, which uses multiple antennas, is one
way of dealing with that, while Wi-LAN's wide-band OFDM uses another.
Experts said it is likely that neither one is the 100-per-cent complete answer to making an OFDM market, one that
would allow your laptop, PDA, phone -- even your garage door opener, as Wi-LAN chief executive officer Dr.
Hatim Zaghloul joked -- to exchange data, access the Internet and so on, thousands of times faster than with current
technologies. Cisco and Wi-LAN might both have pieces to contribute to the OFDM puzzle, several conference
attendees argued.
Wi-LAN's interest in having the meeting, Dr. Zaghloul said -- and the interest of those major technology companies
in attending it -- was to try and have any company with a proposed OFDM technology work with others and follow
a common standard, rather than creating the kind of Balkanized marketplace that other new technologies have
suffered from. That kind of fragmentation means nobody wins. With an alliance, everybody -- including Wi-LAN --
gets a chance to win a slice of the OFDM pie.
Business West readers can reach Mathew Ingram by fax at (403) 244-9809 or by E-mail at
mingram@globeandmail.ca
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