Re: ArrayComm’s Intellicell I-Burst Technology
Saturn V, I read your suggested articles in response to your request for a comment. The technology is being promoted as an alternative to ADSL or stationary cable for Internet hook-up, and as an alternative to WiFi hotspots. It appears to be aimed at data, but not voice markets, at least until VOIP becomes commonplace.
According to ArrayComm, “In fact, I-BURST networks will be able to serve millions of simultaneous users at sustained data rates of 1Mbps at less than the cost of today’s wired broadband services. With I-BURST, a typical user downloading 200 Mbytes per month would pay only about $40 per month.” And, “The speed is faster, and the capacity is greater, so multiple users can enjoy broadband, always-on mobile services. In fact, I-BURST delivers 400 times the capacity of existing wireless systems and 40 times that of the much anticipated 3G systems.” And, so on.
Intelligent antennae appear to be part of the wireless future. Whether ArrayComm’s version will succeed, I cannot say. It is important to note that it has not crossed the chasm, and is still trying to succeed in the early market. It has attracted enough interest to warrant some trials, with Kyocera and LG Electronics showing some willingness to join its value chain as OEMs. But, then they may be just covering their bases, or they may know of probable contracts that require infrastructure and terminals, which appear to be primarily laptops.
Each investor has his own investment philosophy. Because you have asked for my “review”, I will give my perspective on whether “the 3G approach might get derailed,” but it is no more than a firmly held opinion.
There are many more pretenders to the throne than crowned princes. So far, it appears that ArrayComm has yet to successfully commercialize its Intellicell technology in the U.S. or abroad. If it succeeds in doing this, it may become a value adding company. In order for the company to progress into the future, it must be able to earn enough money to reinvest in further developments of the technology. It is in a race to be first to market with a superior product.
Its best hope, I believe, is to try to break into a market, like “static infill,” as a niche that it might conquer. The niche must be scaled appropriately to its own size, a niche where it, say, can secure 30% of the market within 18 months to two years to establish itself as the “static infill” market leader. Unless it establishes itself as a market leader in an identified niche market, it will stall and be passed by.
To contend that it is a serious competitor to 3G is well beyond my imaginative abilities. If you have been reading what I write, you may have noticed that I favor platforms that set a standard and leverage that to become a standard setter. I hope to find companies with a strategic control point in an architecture that serves as a crucial nexus where value can lodge that can become a platform that continues to advance along normal trajectories of performance and by augmentation through the years.
I believe 1xEV-DO will become a strong mobile data competitor because CDMA2000 has become the 3G market leader. It is already far better established as a data optimized solution, and it is compatible with 1X voice solutions. In addition, to the Internet itself, it will profit from the BREW complete solution that will attract many developers to write software applications for position location, games, and the enterprise. The strategy of harmonization will pull it into more and more networks. There is no reason that it also cannot use some form of intelligent antenna technology.
If ArrayComm has valuable intellectual property among its 200 patents, Qualcomm could license its technology if it wished to integrate it into its ASICS or even acquire the company. I suspect ArrayComm would be very pleased with either of these outcomes because it would be able to piggyback on Qualcomm’s value web as the market leader in CDMA.
Leaving aside the merits of the technology, Saturn V, you need to ask yourself, can ArrayComm first scale the heights within the Internet Protocol data market in competition with other broadband solutions from better-established companies? Only then, might it pose a possible threat of substitution to 3G. It has a long path, already filled with many obstacles, including larger competitors with a head start and the coalition-based standards of WiFi, even to become a successful company. It is far too soon to imagine it as a threat to Qualcomm or 3G.
Beyond this, its value proposition as a product company is quite different from the one that I seek in proprietary standard-setting platform architectures. The level of residual uncertainty facing ArrayComm remains unbounded (concepts that will soon be introduced, if they are unfamiliar, in my continued posts on Breakthrough Ideas). Thus, for me, it is far too early to consider investing in such a story stock. I have already made that mistake often enough to have learned my lesson.
I hope this helps.
Don |
