Summary
In the middle of a restructuring, nobody can argue with Nortel's decision to exit the WiMAX space. Combined with the WiMAX shifts coming out of Alcatel-Lucent and Nokia, the implication for WiMAX is clear. Combined with a pullback from WCDMA and an LTE strategy that's short on specifics, the implication for Nortel is just as obvious.
Analysis
The facts of Nortel's decision to the pull the plug on its mobile WiMAX partnership with Alvarion are straightforward; exiting the deal allows Nortel to conserve its sales resources and R&D dollars while putting it in a better position to focus on LTE - a technology more in-line with its customers demands and network deployment plans.
It has been said elsewhere, but the decision is simply basic business logic. However, this logic cannot obscure a few other facts.
Nortel's Decision Hurts Its Credibility. Several years back, Nortel talked up its WCDMA prowess and products. It then pulled out of WCDMA to better attack the WiMAX opportunity. The vendor went on to talk up its WiMAX credentials and the strength of its products. It then pulled back from WiMAX base stations to better focus on LTE and end-to-end WiMAX solutions (thanks to Alvarion), while proclaiming an on-going commitment to WiMAX. Now, it's completely exiting the WiMAX space. Against this backdrop, how many customers will be willing to trust the company when it says it's committed to their products and demands going forward?
Nortel's Odds of Success in LTE Are Limited. Forget, for a moment, that Nortel's credibility has been hurt by a succession of wireless market exits. Forget that company executives have said that they might tackle LTE in the same way they handled WCDMA (sold) and/or WiMAX (partnered, then exited) businesses. To date, the company has yet to market its LTE solutions. It's done little to message its plans for migrating CDMA or GSM customers to LTE. It's done even less to message its LTE base statoin plans. In fact, it's done almost nothing to explain what LTE products it will produce and how it will profit from the LTE opportunity. With operators planning to begin LTE trials this year, weak messaging at this point in the game nearly seals the comapny's LTE fate.
The Move Says Something About WiMAX. Yes, Nortel's decision was more about restructuring than technology. However, would Nortel have left WiMAX if it saw a solid WiMAX market going forward? Again, its LTE prospects don't look good but it's staying in that market. WiMAX will survive and deliver value as a fixed and portable technology. Fixed and portable applications, however, won't deliver the revenues of mobile broadband services. Combined with Alcatel-Lucent focusing on these fixed and portable applications and Nokia calling a halt to production of WiMAX devices, the promise of WiMAX as a 4G competitor to WCDMA and LTE is slowly evaporating.
