Nokia quits WiMax, industry scratches head

Nokia Corp., one of the high-profile founders of the WiMax Forum, has left the organization, raising questions over whether the technology's merits have been overstated.

The mobile phone company said it decided not to renew its membership in the group, but denied that the move was intended to throw doubt on WiMax. However, WiMax will be of limited interest to Nokia until its mobility aspects arrive, which will not be for several years, the company said. It said it will continue to contribute to WiMax standardization.

Nokia, along with Intel Corp., Fujitsu Ltd. and other wireless players, founded the WiMax Forum in April last year as a way of focusing interest on the IEEE 802.16 family of wireless broadband standards. The first standard to be ratified, 802.16d, aims to deliver speeds of up to 70Mbps over a range of 31 miles to fixed users, and an 802.16e upgrade is to add mobile capabilities.

The Forum's success is such that equipment maker Navini Networks Inc., which formerly backed the rival 802.20 standard, recently switched camps, while telecommunications heavyweights such as BT Group PLC, France Telecom SA and Qwest Communications Inc. have also come on board. Alcatel has announced the first 802.16d equipment using Intel chips, which should appear later this year and be ratified next year.

The WiMax Forum members, chiefly Intel, have gone to great efforts to promote WiMax as the way to standardize both fixed and mobile broadband wireless networks, but the reality is that only fixed systems will be in use in the near future, say industry analysts. As a result, companies interested in using WiMax as a replacement for or complement to fixed technologies such as DSL are flocking to join the Forum, while those interested in mobility are keeping their distance.

"The companies most advocating WiMax seem to see it as a wireless DSL proposition," said Dean Bubley, founder of Disruptive Analysis Ltd. "It plays more to fixed carriers than to the cellular market, where Nokia has more of a core customer base." Unlike other equipment makers in the Forum, Nokia does not sell proprietary fixed broadband wireless equipment; and the immediate use of the WiMax standard will be to standardize such offerings, Nokia argued.

Intel has said it doesn't expect WiMax to arrive in notebook computers for two or three years, and the delay will be a year or two beyond that for smaller devices such as mobile phones, further lessening Nokia's interest in WiMax.

Another factor could be Nokia's difficulties in other parts of its business. The company's market share in mobile phone handsets dropped to 29 percent in the first quarter of this year from 35 percent in the same period a year ago, even though handset vendors overall saw a 40 percent uptick in shipments worldwide. Nokia has said it would lower prices to increase its market share, but this could come at the expense of profitability, Bubley said. "Given their recent results, their investors may be scrutinizing their spending on everything," he said.

Nokia is involved in a deal to take over a majority share in Symbian Ltd., the smartphone operating system maker, but Symbian is also struggling to widen its reach outside its high-end niche in the handset market, and has seen sales drop.

In a separate move, Microsoft Corp. said on Monday it would back out of the market for Wi-Fi gear, despite having quickly become one of the biggest players in the market. Microsoft said it was dropping Wi-Fi in order to apply what it had learned to future products, according to reports. Industry analysts said the move was probably due to the low margins and confusing standards roadmap for Wi-Fi equipment.

This story, "Nokia quits WiMax, industry scratches head" was originally published by Techworld.com.

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