[IP] Sobering analysis of WiMax
------ Forwarded Message
From: Gerry Faulhaber <gerry-faulhaber@xxxxxxxxx>
Date: Mon, 07 Feb 2005 09:15:44 -0500
To: <dave@xxxxxxxxxx>
Subject: Sobering analysis of WiMax
The Battle over Canadian Internet PharmaciesDave [for IP if you like]---
>From the Economist, a sobering analysis of the prospects for WiMax. An
antidote to the hype.
Professor Gerald R. Faulhaber
Business and Public Policy Dept.
Wharton School, University of Pennsylvania
Philadelphia, PA 19104
http://www.economist.com/displaystory.cfm?story_id=3600112
World domination postponed
Jan 27th 2005
>From The Economist print edition
The prospects for WiMax technology have been hugely overhyped
TO HEAR some of its more enthusiastic proponents you might conclude that
WiMax, an emerging wireless-broadband technology, was about to take over the
world. WiMax is akin to a long-range version of the popular Wi-Fi technology
that allows computers close to a small base-station to surf the internet
without wires. Whereas Wi-Fi's range is limited to a few tens of metres,
WiMax can, in theory, work over tens of kilometres, allowing huge areas to
be blanketed with wireless coverage. Hence the claims that WiMax will bring
internet access to the 5 billion people who currently lack it, or that it
will render expensive "third-generation" (3G) mobile networks redundant.
The reality, however, is that WiMax has been hugely overhyped. Despite
claims by several firms that they are offering WiMax technology today, the
actual number of WiMax devices on the market is precisely zero. That is
because the WiMax Forum, a standards body that oversees the technology and
ensures that gear from different vendors works together, has yet to certify
any devices with the WiMax label.
On January 24th it announced that pre-certification testing will begin in
July, which means that the first WiMax devices will be available only at the
end of the year, six months later than expected. So far, equipment-makers
can offer only "pre-WiMax" or "WiMax-ready" equipment which will, they
promise, be compatible with WiMax devices when they appear.
The hype is now giving way to much scepticism about the technology's
prospects. "I don't think it's completely hot air, but it won't live up to
its early promise," says Jagdish Rebello of iSuppli, a market-research firm.
WiMax, he says, will chiefly be used by telecoms firms in rural areas, to
plug holes in their broadband coverage.
In urban areas WiMax does not make sense, since it will be uneconomic
compared with cable and DSL, argues Kenneth Furer, an analyst at IDC. "It's
not going into New York, Los Angeles or London," he says. It is also too
expensive for use in the developing world, at least for the time being,
since early WiMax access devices (which must be fixed to the outside of a
building) will cost around $500; other forms of wireless link, such as
mobile-phone networks, will remain a cheaper way to connect up remote
villages.
Fervent believers in WiMax, chief among them Intel, the world's largest
chipmaker, believe the technology will take off when it can be incorporated
into mobile, rather than just fixed, devices. The next version of the WiMax
standard, which has yet to be finalised, will support mobile access,
provided the technology can be made small and energy-efficient enough to fit
into laptops and handheld devices. Alan Murphy, a WiMax specialist at Intel,
is optimistic that WiMax chips for laptops will be available in late 2006
and that they will consume only 10% more power than today's Wi-Fi chips.
Intel regards WiMax as a promising source of future growth. Intel chips
power a majority of the world's PCs, and the company dreams of establishing
a similar franchise in mobile devices, a far larger market.
Equipment-makers, for their part, are counting on Intel to deliver: WiMax
will become widespread only if the price of access devices falls, which in
turn depends on the availability of cheap, mass-produced WiMax chips. But
Intel has a poor track record in shipping wireless chips on time. And it is
still unclear how much demand there will be for mobile WiMax. Carlton O'Neal
of Alvarion, the biggest maker of fixed-wireless gear, notes that the
mobile-phone base-station market is over $55 billion a year. "The big dream
is to cover the planet with WiMax and get to a $50 billion market," he says.
It certainly is a big dream-but so far, that is all it is.
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