Feature Article

January 21, 2013

Alvarion to Exit WiMAX Business

Alvarion, which once earned the majority of its revenue from selling WiMAX equipment, has put its WiMAX division up for sale, Israeli news source Globes reports.

Fortissimo Capital, a private equity fund run by Yuval Cohen, is reported to be in active talks with Alvarion about the sale.

Alvarion, at one time, hoped that WiMAX would be a bigger factor in the global fourth generation networks market, and some forecasts suggest the market still is growing, though less robustly than some had expected. Indeed, it is unlikely Alvarion could sell the WiMAX assets unless a buyer was convinced a market opportunity awaited.

But a potential global market of 59 million users in 2015, and about 33 million WiIMAX subscribers in 2014, is a far cry from the 300 million users of Long Term Evolution, which are expected to be in service by about 2014. At that point, there will be nine times as many LTE subscribers as users of WiMAX in the mobile market.

The global commitment to Long Term Evolution by the world’s mobile service providers means, for the first time, a virtual global standard for mobile air interfaces.

As always, early battles about standards ultimately are resolved only in the marketplace, and LTE has won, despite some efforts to argue the choice is not “either-or” proposition.

In fact, by 2007, when the GSM Association announced support for LTE, the battle was essentially over. Even in the standards-fragmented U.S. market, where two dominant air interfaces--CDMA and GSM--have contended, all the leading service providers have plans to migrate to LTE for fourth generation services, meaning that, for the first time, U.S. consumers will, in principle, be able to buy devices that work on all of the leading networks.

Precisely what that will mean for the state of competition in the U.S. market remains to be seen. But it is noteworthy that even Clearwire, the only U.S. backer of WiMAX technology, recently had decided it had to add LTE capability to its networks.

With the coming Sprint acquisition, it is virtually certain that Clearwire’s air interfaces will migrate to LTE as well. And that is why, in the end, Alvarion has not been able to build a big enough business in WiMAX.

 

The hope was that WiMAX, which once was seen as having a two-year market advantage over LTE, could create “new facts on the ground” by amassing sufficient market share that the choice of air interface standards will be contestable. That did not happen, and the battle has been over for some time.

That does not mean some niches could remain. Certainly any buyer of Alvarion’s assets would have to assume a market of some reasonable size would continue to exist. But it is a niche.


Edited by Brooke Neuman


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