VCs Gun-Shy on WiMax

January 25, 2006

WiMax is among the most promising, and well-hyped, wireless networking technologies around today, but to reach even half the ambitious performance targets set for it will require a step-change in wide-area radio performance.

Key to achieving this are the capabilities of the chipsets that will form the heart of WiMax base stations and customer devices. But for a networking initiative with so much riding on it, investment in this crucial underlying technology is underwhelming, the latest Unstrung Insider report details.

According to the report, entitled WiMax Chipset 2006 Market Outlook, seven startup 802.16 chipset developers had, by January 2006, raised $170 million among them, of which $60 million was secured in 2005.

Now, $170 million is a lot of money by any standard; but given the scale of the challenge, it may not be sufficient. Adding to that challenge is the fact that WiMax is less tightly defined than other networking technologies, such as 3G, WLAN, or DSL. Chipsets for Fixed WiMax (802.16-2004) and Mobile WiMax (802.16e), for example, require fundamentally different designs, and are developed with a wide variety of end-user devices in mind – from base station, to outdoor CPE, to desktop modem, to notebook card, to mobile terminal.

Trying to design products for all of these types of device dilutes R&D resources, with the effect that WiMax startups have typically specialized in different market segments. The effect of this, in turn, has been to dilute the impact of that $170 million aggregate investment.

See the rest of the report summary: VCs Gun-Shy on WiMax.