Summary
In a continuing attempt to broaden its revenue base (facing limited GSM/WCDMA momentum) Starent has made the femtocell space a strategic focus. Femtocell standard and interoperability demonstrations highlight its commitment - but do little to actually differentiate the company; every vendor in the market will be ready to follow suit.
Analysis
It is well understood that Starent needs to expand its sales base outside the CDMA2000 market. Yes, the company can claim dominance in the EV-DO core. And, yes, this market has helped to fuel its growth. But, with CDMA steadily giving way to WCDMA, the company's current customer base can only fuel so much growth.
Thus, Starent has focused on the femtocell opportunity. It may not be as great as the WCDMA opportunity, but it is younger and less penetrated. It may not be as great as the LTE opportunity but it's likely to materialize more quickly.
A demonstration of femtocell networking standards may not seem groundbreaking or even market advancing. But, the Iuh standard being demonstrated is particularly important to Starent and the femtocell industry as a whole.
- standardizing the interface between the femtocell and the operator's core promises the scale and manufacturing efficiencies necessary to hit a desired femtocell price point of $100
- standardizing this interface allows operators to deploy femtocells from a variety of vendors with a common core, allowing them to target diverse user groups with diverse offers (standalone femtos, integrated gateways, etc.)
- lacking its own femtocell device offer, proliferation of the standard allows vendors like Starent to sell their core network gear into a broader array of operators
Of course, even if the Iuh standard is good for the femtocell market and good for vendors like Starent, it's not enough to actually turn femtocells into a money maker for Starent. Beyond the fact that nearly every vendor will support the standard (given the benefits it brings to operators), broader business issues like how to market and sell femtocell services will prevent them from being a mass market success until well into 2010.
