Long Term Evolution vs. WiMax: The 4G Technology Showdown
by Tony Daltorio, Investment U Research
Monday, August 23, 2010
About 30 years ago, VHS and Betamax dueled to rule the video recording technology world.
Today, those two technologies never existed for all that many consumers now. Instead, the big technology debate is all about fourth generation mobile phone networks (4G).
In the ring this time are Long Term Evolution (LTE) and WiMax. But it’s already a late round and the winner seems clear.
So now it’s only left to be seen how to take advantage…
LTE Technology vs. Wimax
Most industry insiders don’t see a clear advantage in either LTE’s technology or WiMax’s. Both offer fast data speeds up to 10 megabits per second.
WiMax hit the technology market a little earlier than LTE, and charges a bit less as well. Yet the world’s largest telecommunications equipment companies have backed LTE.
That includes Alcatel-Lucent (NYSE: ALU), Nokia ADR (NYSE: NOK), and Ericsson ADR (Nasdaq: ERIC) and Sony ADR (NYSE: SNE) joint venture, Sony Ericcson.
They want the technology with the biggest selection of devices to offer their customers.
Phil Kendall, wireless analysts at research firm Strategy Analytics, described the choice this way: “In terms of the underlying technology, there is not a lot of difference between the two standards. LTE’s advantage comes from economies of scale.”
So assuming nothing changes in WiMax’s favor, it’s good to know which companies will lose out big from the outcome…
Intel’s Bad 4G Bet
Semiconductor manufacturing giant Intel (Nasdaq: INTC) heavily backed WiMax. So it now faces a major setback in the world of 4G.
Most mobile phone network operators have already opted for LTE. But even more painful is how even those on the other side are now rethinking their bets.
Intel, for one, has already sunk at least $1.2 billion into supporting WiMax operators such as Clearwire (Nasdaq: CLWR). Yet Sprint (NYSE: S), Clearwire’s biggest investor, mentioned potentially using LTE instead last month.
And while Intel continues talking up WiMax, it appears to be strategically backing away.
Jim McGregor, an analyst at research group In-Stat, has taken note of that. “Intel at one point was ‘WiMax, WiMax, WiMax.’ Now they’re more like – ‘well, we’re going to end up supporting both technologies and there might be the potential for the two standards to merge eventually.’”
Also, Intel recently closed its WiMax program office in Taiwan. However, it insists that it isn’t dropping the technology…
Another Big Loser in the 4G Showdown…
This brings up another loser in the 4G showdown: Taiwan.
That government bet big on WiMax, spending about $200 million promoting and developing the technology. It even encouraged building WiMax telecom networks by granting six licenses in 2007.
For Taiwan, it’s not just a technical issue there. Its companies make 80% of the world’s WiMax supplies, from chips and peripheral equipment to routers.
According to Taiwan’s Ministry of Economic Affairs, shipments of those devices should more than double from 3.1 million last year to 8.9 million in 2011.
Hence the reason that JT Wang, the chairman of Taiwan tech giant Acer, recently said he was “seriously concerned” about Intel’s decision to close its WiMax office there.
That could be the understatement of the decade.
Fortunately for both Taiwan and Intel, WiMax technology probably won’t disappear altogether.
Many emerging markets have little telecommunications infrastructure available. So WiMax can play a role as a cost-effective alternative to fixed wireless connections.
It could also become a behind-the-scenes wholesale support network for LTE telecommunications operators, handling data in crowded “hot spots” where network operators can’t meet demand. Though even then, WiMax would end up with just a small portion of the 4G pie.
Intel’s size might protect it from the worst of its bad bet. Taiwanese technology companies, on the other hand, will find it much harder to cope.
Good investing,
Tony Daltorio
Related Investment U Articles:
- Clearwire vs. Harbinger Capital: How to Profit From this Mobile Infrastructure Cage Match
- Intel’s 3D Chip Challenge
- What You Need to Know About 4G Smartphone Technology
- Can Intel Finally Penetrate This Elusive Market?
- Chart: Intel’s (Nasdaq: INTC) Growth in Emerging Markets
6 Responses to “Long Term Evolution vs. WiMax: The 4G Technology Showdown”
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Tony,
You are looking at this purely from an American point of view. That is why you don’t understand Tiwan’s interest in WiMAX. What people need to understand is that it’s not a “battle” and the comparison of LTE/and WiMAX has been used many times before…and I just don’t see the similarities.
I’m from the US but have spent extensive time in SE Aisa over the past two years. I can tell you right now that many service providers here are going to lean toward WiMAX for the simple fact that many areas do not have 3G. Without a 3G infrastructure, WiMAX is much less expensive to implement. So in areas where 3G is already existing, than I say LTE all the way. But if you don’t have 3G and want to save a ton of money, many providers are still interested in WiMAX. You can read more about it here: http://westgatenetworks.com/anytech/wimax-will-thrive-outside-the-usa-and-europe/
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I’m from the Philippines and i dont agree with your statement that 3G network is not available or prevalent in Asia.
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LTE is no better than WiMax. In fact, it is the exact same apples to apples. LTE is being hyped as being the better because 1. It will be more expensive to run and 2. It consumes more power which in turn will slow down the equipment, thus aggravating customers. In this day in age, customers are looking for reasonably affordable services and WiMax is the proven winner.
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In next year (2011) i’m going to lead a research that makes a comparison of QoS techniques in these two technologies (LTE and WiMAX). I hope contribute in something that helps to decide where is the best way to invest in next 2 years in wireless comunication.
Sorry for bad english, i’m Brazilian… Thanks!
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Having worked in a telecommunications company for over three years as a technical projects manager and having deployed both a Wimax and a HSPA+ Network, i can sincerely say that Wimax leaves a lot to be desired for in terms of performance and stability.
Wimax essentially a standalone platform whereas the 3G/LTE platform is a multifaceted platform.
Wimax is probably well suited for underdeveloped third world countries where telecommunications infrastructure are non existent or very “dubious” at best. However in modern developed countries where telecoms infrastructures exist and a subscriber can have an all in one package, why replicate a platform to deliver a service?
One thing which i have found is that Wimax is a false economy for any operator in that in building penetration is very poor as compared to 3G/LTE thus in a dense metropolis an operator will need to implement far more Wimax base stations for a given area than a 3G/LTE platform. Thus back haul and back haul capacity becomes an issue and hardware cost expand.
At the end of the day why would anybody in their right mind would want to carry multiple devices?
At the end of the day the best combination is xDSL wire/Fibre connection for home/business use and a 3G/LTE handset for telephony and on the move data services. Added bonus: Data Roaming on 3G/LTE!!!! On Wimax you are limited just to your operator’s coverage so you no use when used abroad or outside the coverage area!!
In my opinion: Wimax is dead!
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I disagree. Wimax is going to be the winner especially in developing countries such as Pakistan where the largest Wimax network in the world has been deployed and doing wonderfully well.
In the end i fear this will be just like the GSM vs. CDMA battle… GSM won and became the world standard while CDMA – which is a defunct and out of date technology – remained and was available to US consumers.
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