Standardization is Important – But Intel is Selling to Both Sides of the War

Implications: It is always praiseworthy of an engineer to articulate the need for standardization.  Even demands for harmonization are praiseworthy. However, in my years in the business, calls for harmonization usually comes from those who have everything to gain in such actions.

Analysis: Call it cynicism, but I prefer to call it realism.  Let’s call for what it is WIIFM (pronounced WUH (first part sounds like WIN) FUM (second part sounds like FUN);  WUH FUM) “What’s In It For Me”.  Does anyone honestly believe Intel wants to play nice? 

Why would Intel want to harmonize WiMAX with LTE (long term evolution)?  The answer is MONEY.  No harm with that.  Intel is worried about the impact of two competing standards.  Guess what get over it.  It is happening and nothing is going to change that.  So long as companies want to compete with one another there will be competing standards.

Its funny, in my experience, the first guy who wants everyone to lay down their arms is usually the guy who fears they are losing.  We all heard Arun Sarin ask for one standard.  Sarin is gone; talk about stirring up trouble just as you are leaving.  I don’t blame Sarin, frankly I think it was humorous.  Think about it.  Sarin’s last major industry action is to ask for a single standard for the world.  I wonder if Sarin’s next job is the CEO of a vendor or the head of a private equity group?  It would be even funnier, if Sarin ends up the head of a WiMAX player.  If Sarin ends up running a LTE startup vendor he is going to likely encourage the fighting; the why can be found as you read on.

The harmonization tactic used by strong vendors is usually a smoke screen.  The vendors want the fight.  The more fighting there is the more cash your competition expends.  Rather than let the marketplace decide what technology is best, you decide for them by driving your competitor into bankruptcy.  Don’t laugh it works.

The vendors who call for playing nice usually have no intention of playing nice.  What is the old line about arms dealers?  Arms dealers will sell to both sides of a war.   Vendors are like arms dealers.  They will sell to anyone with cash.  The best way for drumming up business is by encouraging a fight.  When a strong vendor asks for harmonization it is a smoke screen.  Strong vendors want to look like they are playing once so when the accusations that come later from carriers about the ineptness of the standardization process, a company like Intel can say “not me!”.

Weak vendors (WiMAX or LTE) calling for harmonization are doing so because they are so close to running out of cash they barely are enough to buy a cup of coffee.  Notice, that the weak vendors have not started screaming yet.  I throw startup companies in that pool of weak companies.  Right now private equity is fueling these smaller companies in the LTE and WiMAX space.  Private equity investors typical exit strategy is selling their companies to the bigger fish.

In short what I am saying is, it is in the best interest of investors to continue the fight.  Investment opportunities will disappear if everyone decides to play nice.