2. Con: Reality Won't Match The Hype

Last month's announcement that official certification of WiMAX gear will be delayed by six months threw cold water on what had seemed like a never-ending parade of hype surrounding the wireless broadband technology. Now analysts are piling on with warnings that WiMAX may not live up to expectations.

Behind the WiMAX hype is Intel, which will manufacture WiMAX chipsets. The company envisions a WiMAX chip inside every home network, laptop and PDA. Even more, it doesn't want to be caught flat-footed as it was several years ago when still emerging Wi-Fi technology was often referred to as 'What-Fi.'

But the delay has put supporters of WiMAX on the defensive as analysts are questioning the importance of the technology, accusing it, in some cases, of having little more than niche status.

"The 802.16 based WiMAX standard primarily will serve niche-market applications in the near term," writes iSuppli analyst Jagdish Rebello in a report entitled "Hype Continues to Build for WiMAX."

"WiMAX will find a niche as a backhaul for the hotspot access point," believes Rebello said.

He believes that WiMAX also will find an audience with carriers looking to extend their broadband reach to rural and less-populated areas. WiMAX could even serve as backhaul for ISPs. However, reaching rural subscribers and providing an alternative for ISPs "represent only a small fraction of the total available broadband market," according to Rebello.

While WiMAX is a viable technology, Rebello warns that it "will not dislodge or disrupt existing technologies like cable modems and xDSL, especially in the urban areas of developed countries."

Expenses And Competition

Pounding another nail in the WiMAX hype coffin is research firm In-Stat. Using WiMAX to reach 98 percent of homes "would cost an estimated $3 billion " including equipment, towers, and ancillary costs," the research firm predicted.

Initially, WiMAX will not support mobility. Will mobile WiMAX, or 802.16e, be the technology's path to prosperity? Perhaps, but that could be at least three years away, according to another analyst.

"You have to assume that mobile 802.16e products (if they support mobility) will not be available and ready to deploy until 2007 or 2008 at the earliest," says Andy Fuertes, analyst with Visant Strategies. "That could be too late."

Although Sprint and Nextel have signaled interest in WiMAX, the future of the technology is unlikely to be with large telecoms, according to Fuertes.

"Very few mobile carriers are going to deploy a fixed technology extensively," says Fuertes. Mobile carriers could gain a lead on WiMAX by adopting competing, more mobile technology from vendors like IP Wireless or Flarion.

"If that were to occur then that mobile solution could eclipse WiMAX in the fixed world as well as in the mobile world," says Fuertes.

Another potential threat to WiMAX is HSDPA, a 3Mbps software upgrade to existing UMTS 3G systems. The bottom line: This set of analysts believes that WiMAX won't live up to the hype.

"WiMAX would still succeed, since there are a world of needs out there, but it may remain as a sub $5 billion market," says Fuertes. "That is still success but the mobile market is more than 20 times that size."

Republished with permission from MobilePipeline Copyright © 2005 CMP Media LLC. All rights reserved