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Ericsson deals blow to unified 4G dream

Pulls out of WiMAX

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Ericsson cancels WiMAX activities

Last week, Ericsson confirmed reports that it had closed down development and manufacturing of WiMAX products, although it remains a member of the WiMAX Forum, will support the technology where required in integration projects, and will still resell Airspan fixed WiMAX kit.

"WiMAX offers nothing that cannot be offered by 3G-based technologies," said Mikael Persson, manager of W-CDMA strategy and business. "Right now, we don't work on a WiMAX system. We've invested in the basic research, but we don't see the point in taking that final investment to prepare factories, because we don't see the volumes in the market."

He added: "We want to focus our resources where we'll get the most bang for our buck. And right now, there's no bang at all putting it into WiMAX. HSPA is where the market is happening right now."

Is Ericsson putting WiMAX firmly back in its place after the overexcitement generated by a few isolated carrier choices, those heavily Intel-driven? Or is it recklessly excluding itself from a pole position in the multi-network, converged 4G world that will inevitably evolve over the coming decade, with a blind attachment to its own technologies?

Response from other vendors

The answer will partly depend on whether other important vendors and operators take their cue from Ericsson. Despite its massive market share and its ability to set the agenda in its key markets, Ericsson is adjusting to a world of fixed/mobile convergence and all-IP, just like the other anti-WiMAX cheerleader, Qualcomm.

In this scenario, it will have less logical leadership than in 3G, and will have to fight for its position - a battle for which it is assembling powerful weapons, from building up its managed services business to acquiring technologies in fixed networks and IPTV.

Given that, according to Motorola and others, it is relatively trivial - in carrier-class R&D terms - to develop LTE and WiMAX in parallel, Ericsson might have been expected to retain WiMAX in its strategy, in order to cover as many network bases as possible in its multi-technology world. So the exclusion of 802.16 looks like a calculated political gesture, designed to sway the climate of opinion against WiMAX and stack the odds in favor of a 4G where Ericsson's chosen systems are in the lead.

But in the vendor community, who will follow Ericsson's lead? It is diverging radically from its fellow Scandinavian GSM giant Nokia. Nokia is less interested in large carrier convergence and more focused on new markets driven by its key handset business - high end multimedia applications and the enterprise.

In this context, it is embracing all-IP and trying to extend its user base beyond its traditional cellular carriers, something Ericsson risks failing to do if it remains too LTE-centric. Nokia, keen to reduce its dependence on cellcos, is looking aggressively to new models that are based on technologies like Wi-Fi and WiMAX, and is well ahead of Ericsson's handset interest, Sony Ericsson, in dual-mode or multimode devices.

Among the other majors, Motorola and Nortel have to remain committed to WiMAX because they have sidelined or exited UMTS. In the medium term, they have the fallback plan - should WiMAX fail - of their aggressive LTE development plans, and claim the experience of creating 802.16e systems will give them a headstart in this technology and, implicitly, 4G.

But to generate new customers and revenues now, they are highly dependent on WiMAX taking off, at least for one generation - even if that platform eventually becomes subsumed into a broader, and potentially LTE-driven, 4G system. If this scenario plays out, of course, Ericsson will have made a strong gamble, relying on UMTS for its short term revenue streams - a sector where it is already very strong - and then joining the pack at the LTE stage.

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