Nortel turns to Alvarion for Mobile WiMAX

The announcement inevitably raises questions over why Nortel has apparently turned its back on its own technology in WiMAX, a market it chased so assiduously to compensate for its failure in W-CDMA, and to pave the way to a unified OFDM-based platform for 4G. It seems likely that it put too many resources into creating a WiMAX system heavily tailored to the needs of Sprint Nextel, a contract where it lost out to Nokia (now NSN), and so found itself behind other early movers like Samsung and Motorola (the other Sprint winners). Despite a strong R&D track record in key areas like OFDMA, MIMO and mesh, and a convincing roadmap on paper, Nortel suffered from its lack of WiMAX devices - in the early phases, operators feel safer buying terminals and base stations from the same vendor to guarantee full interoperability, and innovative products like the Nokia N810 have certainly helped to drive commercial success for infrastructure makers. The Canadian firm has failed to go public with a major WiMAX customer, while Motorola - with a similar need to make up for 3G failures, and a similar strategy - grabbed several flagship deals, not just Sprint Nextel but Clearwire, Pakistan's Wateen Telecom and others.

So, falling behind, it seems Nortel has decided to give itself a leg-up by partnering with a pure play WiMAX vendor that has managed to sell its WiMAX and pre-standard WiMAX systems into 200 accounts (admittedly most of them small carriers, in Alvarion's traditional market of broadband wireless oriented to fixed access in emerging or underserved markets). The impact on its plan for a unified WiMAX/LTE architecture is uncertain, although conceivably some of the Alvarion technology could find its way into the broader Nortel roadmap and even give the Israeli firm an entry point to LTE.

The idea of being able to target large mobile or converged carriers would have been beyond Alvarion's dreams before, and although Nortel has not scored highly in the tier 1 base in recent years with wireless, it still has significant sales channels, operator contacts and the installed bases in GSM, CDMA, switches, VoIP and other aspects of the large carrier network where Alvarion has been unable to play. So the alliance should be good for Alvarion's market reach as well as its overall credibility, at a time when it appeared to fall uncomfortably between two stools - too small to compete for large accounts with Motorola or Samsung; but more expensive and complicated than the WiMAX start-ups as an acquisition prospect for a large vendor, and with an awkward proprietary legacy base. 

Alvarion's statement said its "development of its portfolio of leading edge WiMAX base stations will be accelerated by Nortel's contribution of resources, expertise, and funding to enhance the development of the joint solution. Both companies will also work together to perform interoperability testing (IOT). Alvarion will focus on device-to-network IOT and Nortel will concentrate on the end-to-end network integration with the IP core, and applications.

Licensing third party technology and focusing the bulk of R&D resources on LTE is becoming an increasingly popular strategy for large wireless vendors. Nokia Siemens, despite its Sprint deal, is relying heavily on partnerships; Cisco acquired Navini; Ericsson has largely steered clear but has resold Airspan kit where required; Fujitsu's win at the KDDI-led WiMAX consortium in Japan was the result of a collaboration, also with Airspan. Nortel had seemed one of the more likely companies to persist with its own products, because of the strategic importance of WiMAX, but it has also been under pressure to get into the market more rapidly as well as cut costs, so a possible OEM deal has been on the radar of the WiMAX specialists for a while. The biggest disappointment will be for Airspan, Nortel's 802.16d partner. However, the small print about the Alvarion agreement suggests that there may still be some routes into the Nortel kingdom for smaller partners - during the period of the new contract, Alvarion will be Nortel's exclusive supplier of "802.16e 2x2 and 2x4 macro base stations," but other emerging formats such picocells and femtocells are not included.