Alcatel-Lucent refocuses WiMAX business to support LTE

Several days ago Ben Verwaayen who has been Alcatel-Lucent’s CEO for 6 months now since Pat Russo’s resignation, presented its fourth quarter and year-end results (for 2008) in a press conference in Paris. Still losing money for the eighth consecutive quarter, the losses for the year ending 2008 was boosted by a huge write-off of €4.7 billion in assets. The best news was a decrease in annual revenues of only 4.5% to €16.9 billion and an unexpected operating income of €297 million for Q4 2008. Anticipating a decrease of 8% to 12% of the global telecom market in 2009, Verwaayen highlighted his plan to reduce costs and implement a much more focused R&D with a streamlined product portfolio. He expects a return to profitability by 2010.

New “Enhanced Wireless DSL” platform

Since WiMAX is mentioned to be one of the refocused lines of product, I asked Philippe Keryer, Executive VP and President of the Carrier Products group to explain what this means. “Our major mobile customers,” Keryer says, “have made the choice of LTE which is now becoming mainstream for the mobile wireless broadband. Our focus is now to make an offer with what we call “enhanced wireless DSL” which is a platform solution for wireless broadband using WiMAX where LTE is not possible, especially for rural or less populated areas.”

For Keryer, because WiMAX and LTE are very close technologically speaking, it is easy to create a common platform mixing both technologies. He mentioned the case of China Mobile, which has issued an RFP, to which Alcatel-Lucent has responded. China Mobile says it will use TDD (Time Division Duplex). Keryer further stated that the performance of WiMAX is pretty much similar to LTE. He says the cost depends on the range of the frequencies used, but he does not provide details on cost comparisons in the same frequencies. With this new enhanced wireless DSL platform using both WiMAX and LTE, Alcatel-Lucent is trying to enlarge the scope and flexibility of its solutions for mobile operators by blending both technologies to reduce cost and make them work in a complementary manner for customers. “We have dramatically reduced our investment in WiMAX for 2009,” Keryer admitted.

WiMAX: LTE’s sidekick

Asking what kind of customers Alcatel-Lucent will target with this new solution, Keryer added, “Clearwire is not at all the type of customer we are trying to reach because their approach is clearly to use WiMax as a cellular technology to compete with LTE. It is not our objective to sell WiMax as an alternative to LTE.” This positioning of WiMax as LTE sidekick is associated with a significant boost of investment in LTE technologies by Alcatel Lucent.

I checked a statement made on 15 December 2008 by Alcatel Lucent about its WiMax strategy. It said: “Going forward, we will continue to offer a fully compliant WiMAX Rev-e standard solution supporting nomadic and simple mobility, but we will not develop a complex roadmap of features required to enable WiMAX players to directly compete with 3G/LTE Mobile operators. On the contrary, we will shift such investment to reinforce our LTE R&D, both in FDD and in TDD, in particular ensuring a smooth evolution from WiMAX to LTE-TDD.” The statement concludes: “Alcatel-Lucent intends to lead the long-awaited convergence of WiMAX and LTE-TDD standards in the coming years, as we believe the market cannot afford to support two competing 4G technologies.”

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  1. WiMAX is quickly becoming a niche technology, with Clearwire as the only large customer.

    ALU’s announcement comes on the heels of NT’s decision to end its OEM partnership with Alvarion and Nokia’s deicsion to discontinue its only WiMAX handset. Last October, there were stories about NSN defocusing WiMAX, especially when Clearwire replaced NSN with Samsung in several markets.

    WiMAX’s appeal so far has been in (a) its appeal to work in TDD spectrum and (b) Intel’s backing for chipsets. LTE will likely make both of these irrelevant

  2. Arnon Kohavi says

    Wireless DSL…in 2000, my company Vyyo helped form the Wireless DSL Consortium which went nowhere:

    Many of the same players participated then. Since then everyone has been trying to address the same market with zero results.

    3G/4G is the technology for WAN/mobility and WiFi is the technology for LAN. For a new technology to succeed, it needs to either address a new market (which WiMax does not do except in rural and developing world), or be so much better (which it is not and this rarely happens), or be endorsed by the major players (again, major operators and device makers never supported WiMax).
    As Intel is a good contrarian indicator in the wireless space, perhaps if Intel exits WiMax, the technology will finally do well…

  3. With Nortel and Alcatel-Lucent continually bleeding money, I wouldn’t use their technology roadmaps as a indicator of the industry. They both have made bad choices for years.