Nokia Dumps WiMAX Business

WiMAX logoNokia Siemens Networks a joint venture between Finland's Nokia and Germany's Siemens AG is a giant in the telecom industry, behind only Ericsson AB and China's privately owned Huawei in gear (e.g. base stations, etc.) sales. With Nokia's well-documented core sales struggles, the gearmaker subsidiary has also been impacted and has looked to tighten the belt.

As part of that effort it just sold [Press Release] its WiMAX unit to NewNet Communication Technologies, LLC, a Skyview Capital, LLC portfolio company. WiMAX is a fourth generation (4G) telecommunications standard, which has been back by, among others, Sprint Nextel Corp. (S) in the U.S.

I. WiMAX: Past and Present

Much like the HD DVD vs. Blu Ray war, WiMAX has fallen out of international favor while LTE is now accepted by most as the de facto 4G solution for future deployments (even Sprint is working to switch to LTE by the end of 2012). This stands in contrast to the last generation where GSM and CDMA vied for international supremacy in the 3G market, an even today still are locked in this battle.

That said WiMAX isn't quite as dead as HD DVD -- not yet, at least.

The WiMAX unit was actually a relatively recent addition for NSN, purchased in 2010, back when things looked more promising for the standard. Despite its parent company Nokia's widely publicized view that LTE was the future and WiMAX was a footnote, NSN still sold WiMAX solutions prior to the purchase. At the time it was simply rebranding Alvarion WiMAX products -- an Israeli wireless solutions provider.

NSN received the WiMAX unit as part of a 2010 $1.2B USD purchase of Motorola's Network infrastructure unit, which was like more driven out of the desire to grab the LTE and 3G technologies and intellectual property, with WiMAX a fringe benefit. The deal helped close Motorola Inc.'s effort to divide into two companies, which began in 2008. The one company -- Motorola used to be the parent of the network infrastructure division. After the sale it focused its efforts on its enterprise mobility solutions division, which is active to this day.

Meanwhile, the handset division, which has seen a couple rocky years with losses in 2007 and layoffs in 2008, was spun off to form Motorola Mobility. Motorola Mobility would go on to recover, thanks to its use of the suddenly successful Android operating system by Google. That relationship eventually deepened with Google opting to purchase Motorola Mobility for $12.5B USD.

II. Who are the Unit's Customers?

Nokia Siemens Networks page brags about the WiMAX Unit, commenting:

We are the global leader in WiMAX with over 40 customer deployments and more than 3 million WiMAX devices shipped to date.

We did some quick research to confirm that claim, and what we found was interesting. It appears that NSN's claims of WiMAX dominance are relatively misleading.

Samsung is generally regarded by analysts as the top WiMAX network hardware producer. Notably, Samsung provided ClearWire with the hardware it needed to power Sprint's network (documents indicate that some of the hardware may have been provided through a convoluted licensing deal with Ericsson).

By contrast, NSN appears to have focused on smaller deployments, such as installations in Iraq, Poland, Ireland, and Taiwan. Additionally Nokia delivered at least one WiMAX-capable handset -- the N810 -- which it might have counted towards its "3 million WiMAX devices shipped" claim.

III. What's Next for the Unit?

It's unclear what its new owner will do with it, but it's keeping on 300 employees from the unit, ones who escaped Nokia's latest round of layoffs. NewNet Communications' primary business has been in selling mobile service platforms such as e-billing and streaming media to mobile carriers.

Regardless of how it chooses to use the WiMAX division -- a mystery at this point -- it likely got a pretty good deal on the WiMAX unit. The Nokia press release commented:

Specific terms of the transaction were not disclosed.

In the case of a public sale like this, that typically means that the transaction price was small and the parties involved wanted to keep it a trade secret for obvious reasons.

One possibility is that NewNet could focus the unit on optimizing its licensed platforms for use on existing WiMAX networks.

Source: DailyTech

Tags: Nokia, WiMAX

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