Hey – It’s Just a Contraction

As long as I have been doing industry research, contraction has been a natural part of a technology market’s development cycle. Without the aid of any old reports I am pretty sure there were more DSLAM vendors in the late 1990’s then they are today. However I don’t think anybody would interpret the contraction of vendors as a failure of the DSLAM market or DSL services. 

 

It is only natural when a new opportunity develops around a technology that a wide array of companies – both start ups and established, race to see what part of the opportunity they can capture. Over time as technologies mature, and standards become set, some companies exit the market for several reasons. Some companies just bet on the wrong technology, and lose the standard fight. Others just have corporate issues, such as inadequate funding, that cause them to go out of business. Some just never gain enough market traction to justify continued investment in the technology. These are some of the same things I have seen over the last year in WiMAX.

 

Since the summer of 2008 the WiMAX market has seen three notable vendors either leave or reduce their investment in WiMAX – Nortel, Nokia Siemens Networks, and Alcatel-Lucent. However it would be incorrect to interpret the actions of these three vendors as a sign on the absolute health of the market. Nortel left a lot more markets than just WiMAX. Nokia Siemens Networks never had much market traction. Alcatel-Lucent, while certainly having more WiMAX traction than the other two vendors, made the decision that the type of traction the company had didn’t fit the company’s earlier expectations for the market. Not all markets are for all companies. But to say a contraction in WiMAX vendors is the same as a contract in WiMAX would be incorrect.

 

Just a few weeks ago Beceem announced it had shipped 1 million 802.16e chipsets for its third quarter.  Motorola recently announced it has shipped a million CPE’s. Russian WiMAX provider Yota recently announced it had 100,000 subscribers after three months of service, and was on pace to reach 200,000 subscribers before the end of 2009. On top of that vendors continue to announce new deployment wins such as Alvarion’s recent win with Clearwire in Spain. All of these are proof points I would use to say the contraction in WiMAX vendors does not equal a contraction in the market. Trust me, I have nice collection of t-shirts from former wholesale Internet backbone providers, and the contraction of that market isn’t keeping you from reading this on the Internet.