WiMAX solutions developer Alvarion Ltd. (Nasdaq: ALVR; TASE:ALVR) has survived the crisis of the past few years and led an important market in the future development of world communications. The company has vast know-how but the sad truth is that it has come up against a brick wall.
Call it bad luck, political problems or technology that is ahead of its time - the result is the same. The mobile WiMAX market, a communications protocol that was meant to lead to the entry of broadband wireless communications into PCs and mobile phones has not developed in the scope or speed that was expected.
Alvarion, which develops equipment designed for tracking wireless communications from antenna base stations to the core of the network relied on this protocol as a future standard and was recently required to rethink the company's path ahead.
Behind Alvarion's problems is an argument that has been taking place for several years in the communications industry about the protocol to lead the wireless communications revolution. A protocol that will ensure availability for movies, video calls and connectivity based on the Internet at a relatively low cost for each telephone or PC. While those supporting WiMAX were convinced that the market was ready and big enough for such technology, a large number of companies in the sector, throughout the food chain, believed that the market will move to the next technology - LTE - in the coming two years.
The differences between these two technologies are not a significant matter, but a readiness to read them. Most cellular operators - those that have the money and are prepared to upgrade their communications infrastructure chose LTE as the lead technology for the next generation of mobile communications. Communications services providers that decided to adopt WiMAX, as a permanent solution or intermediate solution, were caught in financing difficulties that deteriorated following the crisis in 2008, and by accident or otherwise WiMAX became a niche market instead of the great hope.
The great hope of the mobile WiMAX coalition the US communications services provider Clearwire got off the mark significantly late, and only through a huge investment of $2 billion by giants such as Intel, Google, Time-Warner was it able to get up and running. But when research company IDC finds that by 2011 more money will be spent on LTE than WiMAX, it is not wonder that even Clearwire is talking about LT solutions.
And among all the large money, Alvarion has had to tread a path between the political relationships of the major communications services and equipment corporations and the tough competition. Alvarion has a market, which theoretically can keep it afloat. There are opportunities is developing markets which can continue to strengthen the company and keep its head above the water. But as the market looks at the moment, Alvarion needs to significantly change, or at least become a much leaner company.
Published by Globes [online], Israel business news - www.globes-online.com - on May 3, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010