HTC taps into GSM/WiMAX opportunity with Russian launch
One of the most promising markets for WiMAX, especially from 2010, is as a data overlay for GSM operators, in areas where there are no 3G licenses as yet, or where 3G will not be cost effective. Phonemaker HTC is pointing the way, unveiling a GSM/802.16e dual-mode device that will initially be offered by Russian operator Scartel, which has an ambitious 2.5GHz build-out program, starting in Moscow and St Petersburg.
Operating under the brand name Yota, Scartel has carried out trials, using Samsung infrastructure, in the two major cities, and says it will go commercial by year end, having built out 1,600 base stations at a cost of $200m by then. Emulating Sprint's Xohm launch, it says it is essential to offer a range of mobile broadband terminals from day one, to encourage high value customers such as business travellers - and these will make roll-out of fixed services, especially in more rural areas, a more viable proposition.
As well as the HTC handset, Scartel will launch with USB modems from Samsung and Asus, plus ExpressCards for PCs and, from early next year, it hopes to add support for multiple access WiMAX/Wi-Fi embedded laptops and dongles.
The handset is the star of the show, though, supporting wide area roaming on Russia's extensive 2G network, not just on Wi-Fi hotspots, which are sketchy in coverage outside the metro areas. The phone, called Max 4G, will automatically switch to a VoIP-over-WiMAX connection, at low rates, when two Yota subscribers are connected to one another within the 802.16e coverage zones.
The handset is a good example of how WiMAX operators in emerging but high growth markets need to balance their appeal to two key constituencies - the bulk of the target base will require low ARPUs and basic access services, but there is a sizeable and growing population of business travellers and other high value subscribers. The latter will want not just basic cellphones, but devices with all the features expected by smartphone users in the developed mobile economies. Hence, the Max 4G will feature a 3.8-inch 800 x 480 touchscreen display, integrated GPS and Wi-Fi, an accelerometer, a 5-megapixel camera and will use the Windows Mobile 6.1 operating system.
Yota's basic subscription allows customers to access online games, maps, messaging and file exchange applications while on the move, and there will be add-on services for accessing films, video and TV programmes online.
The non-branded version of the device, which is basically a variant of the popular HTC Touch midrange smartphone, with WiMAX added, is called HTC T8290 and will be offered to other WiMAX operators. A CDMA model is expected by many to be developed, so that it could be targeted at Sprint/Xohm and Japan's KDDI/UQ venture. There is also much speculation that HTC will create an Android handset for WiMAX, similar to its G1 phone for T-Mobile's 3G network. Android, once better established, is likely to prove a more mainstream option for developing economies than Windows Mobile, which remains largely the preserve of the mobile enterprise user.
And there is a large potential market for GSM/WiMAX combinations, with some chipmakers, like Comsys, already heavily focused on this sector. In recent research by Rethink Technology, a significant base of operators was identified, holding only 2G networks, but needing to increase their revenues and customer retention over the next few years by adding data, internet and multimedia services. The research calculated that, in the global base of 2G-only carriers, almost 200 will be using WiMAX in some portion of their footprint by 2013, in a multimode system combined with GSM/EDGE and sometimes 3G. In capex terms, mobile operators will account for about one-third of Mobile WiMAX spending by 2012 and the cellular/WiMAX base is the largest market for 802.16e terminals by 2012, and the second largest market (after DSL alternative and fixed operator convergence) for infrastructure.
From HTC's point of view, creating handsets for operators in this situation, as well as for carriers in developed economies like Xohm, would be in line with its strategy of stealing a march on larger players by supporting minority technologies at an early stage. It was the first cellphone manufacturer outside the pure ODM community to create Windows handsets, using them to establish a high end range under its own brand, rather than focusing entirely on white label devices, its original business model. It remains willing to submerge its brand in order to gain early presence in a new and promising market, ahead of the competition, as it has done with T-Mobile G1.
Given Xohm's devotion to open access, a WiMAX Android phone would not only enable HTC to be a first mover again, but also to launch an Android product under its own name in the future. Android products for Xohm are widely expected for mid-2009, given that Google and Sprint Nextel have collaborated closely on the software platform and user experience, and Google is a major supporter of the open access web services model on which Xohm is pinning its hopes. HTC will surely be positioning itself for that opportunity, as well as for the higher volumes promised by the GSM world.
