- Buyers Guide
Military Microwaves Supplement
The broadband wireless industry is making tremendous progress with the evolution of fixed WiMAX technology and achieving device interoperability testing (IOT). Despite the efforts to develop a large, reliable ecosystem and to align the supply chain for accelerating broad-spread market adoption, volume shipments are not there yet.
Reaching shipment levels in the millions of units annually is a complex task that needs commitments from a multiplicity of complementary industry leaders. To succeed, the WiMAX ecosystem must deliver on development commitments to leading original design manufacturers (ODMs), which are the essential link to low cost manufacturing; critical to meeting the customer premises equipment (CPE) price point threshold that fits the broadband operators’ business models.
The most advanced WiMAX technology in terms of IOT, field trials and commercial implementation is based on the IEEE 802.16-2004 standard for fixed applications where a choice of chipset, base station and CPE are available from a rapidly evolving industry. This ecosystem has not yet reached the maturity needed to meet the CPE cost target that will impact the demand inflection point, but the quick progress the industry is making leads us to believe that 2007 will be a crucial year for fixed WiMAX equipment.
By maintaining the current development pace, we believe that the CPE cost target that analysts have set at $75 to $125 (depending of the diversity of applications/services and at 50,000+ unit shipment) can occur in 2007.
Analysis: The chipset manufacturer’s vision
WiMAX chipsets are considered one of the most expensive components to building an effective CPE. To lower CPE cost and ease the transition to IEEE 802.16e-2005 (Mobile WiMAX), chipset vendor strategies are evolving to enable ODMs more flexibility in their design through modularity rather than full integration. Vendor roadmaps incorporate open and modular platforms such as Miniature Peripheral Component Interconnect (Mini PCI) and PCMCIA’s CardBus.
The Mini PCI specification defines an alternate implementation for small form factor PCI cards. The specification uses a qualified subset of the same signal protocol, electrical definitions, and configuration definitions as the Conventional PCI Specification (see Figure 1). In contrast, the CardBus specification is derived from the popular PC Card form-factor while upgrading the bus interface to 32-bits. Chipset developer TeleCIS Wireless notes that nothing in OFDM prevents PC Cards, Mini PCI modules, or even USB devices if the chipset offers low power consumption within the specifications of the device interface.
The objective for Canada’s Wavesat is to provide the necessary modularity to circumvent the operator hesitation for standards evolution, while reducing ODM’s non-recurring engineering (NRE) investment and risk. “Near- to medium-term applications for WiMAX are driven by fixed and portable application services, CPE cost, and platform flexibility,” said Wavesat’s CEO Michel Guay. Network operators are motivated by affordability and availability, more so than by the underlying technology. Vendors remain confident that the industry can meet market needs through the development of highly integrated solutions such as Mini PCI and CardBus and by leveraging a well established ecosystem (and business model) adopted for successful wireless technologies such as Wi-Fi.
Prompted by interest to identify a possible catalyst for the fixed WiMAX industry, Maravedis continued further investigation of Mini PCI solutions, potential CPE benefits and a summary of where the 802.16-2004 supply chain sits in terms of capacity to deliver.
Analysis: the virtues of Mini PCI
Maravedis first reviewed and validated the Mini PCI advantages. This included an assessment of the progress being made in bill of materials (BOM) and consequently its impact on the WiMAX CPE cost and availability trends. Secondly we reviewed the available Mini PCI products and their corresponding CPEs. Finally, we benchmarked them according to their state of developments and supply chain diversity (sourcing reliability).
The Mini PCI advantages
The consensus on Mini PCI advantages reside in benefits for both operators and suppliers. For operators an open platform can lower investment risk, favors increased revenues, and contributes to faster ROI. For OEMs and ODMs, Mini PCI is a way to leverage their current designs, reduce product options, maximize customer retention, manage CPE cost, and speed up time to market.
For Equipment Suppliers:
Benefit #1: A flexible air interface
Supported WiMAX frequency bands vary by country and region of the world. Mini PCI allows delivery of a consistent platform that supports regulatory homologation requirements. This flexibility can minimize CPE manufacturing options and reduces inventory. ODMs accustomed to offering single CPE models (the outdoor WiMAX CPE, for example) can re-use the Mini PCI radio module across a broader variety of CPE (for example: indoor, outdoor, multiple frequency bands, and/or multiple software loads) with confidence that the radio IOT and regulatory requirements remain consistent.
Benefit #2: Faster time to market and lower technology barriers
The Mini PCI module integrates modem chips with radio frequency integrated circuits (RFICs). Suppliers must match modem and RFIC vendor requirements to design a robust system. Modularity mitigates risk of RF integration into CPE during the early stages of the market by incorporating a proven, single radio board. Maravedis experience suggests that suppliers will continue to shop for multiple chipset vendors as they become increasingly more skilled in radio integration.
Benefit #3: Competitive BOM and efficient manufacturing
Mini PCI implementation is affordable since most processors already integrate a PCI bus. Required support hardware, such as a connector, is inexpensive. Vendor Si-Wave adds that the only way to reduce BOM costs are through further silicon integration, but with the multiple profiles and frequency bands supported by WiMAX Forum, integrating RFICs and the baseband into a single silicon component could be risky. Modularity allows further supplier optimization such as common component sourcing, inventory rationalization, and utilizing established production lines. These optimizations potentially offset the cost adders for Mini PCI-specific hardware and testing.
Benefit #4: Reduced NRE cost and engineering risks
The Mini PCI strategy leverages an open platform architecture that reduces WiMAX implementation complexities by the re-use of existing hardware such as the main board and network interfaces. Software development re-use is possible as well where the same main processor is implemented instead of embedding various manufacturer-specific System-on-Chip (SoC) processors.
For Service providers:
Benefit #1: Ease the transition to WiMAX standards
Operators with established CPE product lines utilizing a Mini PCI interface minimize the risk from evolving standards and potential IOT delays. For operators already utilizing CPE with a Mini PCI interface, these products can potentially be upgraded to a WiMAX Mini PCI module, while maintaining feature sets from a proven platform. In addition, a WiMAX Mini PCI module will have already completed IOT with base transceiver station (BTS) suppliers during the engineering phase, rendering it interoperable with the upgraded infrastructure while implementing the transition to new WiMAX profiles. This benefit does not apply to operators who have not experienced Mini PCI-enabled CPE before. Mini PCI also does not address the mobile battery-powered handset CPE opportunities that are emerging for future WiMAX standards.
Benefit #2: High customer retention
MiniPCI modularity eases legacy CPE platform evolution (same look and feel and value differences), serving customers which are familiar and pleased with a proven product.
Benefit #3: CPE performance and capability for differentiated services and greater ARPU
Rather than utilize an embedded chip processor on a SoC, the Mini PCI-based CPE architecture permits the use of an external main board processor. By leveraging a more powerful main board processor, the Mini PCI-based CPE architecture provides the flexibility and the processing power for feature-based pricing that contributes to higher ARPU. Hybrid CPE implementations based on more powerful processors are possible to combine WiMAX with Wi-Fi, DSL, or other broadband technologies.
Benefit #4: Lower CAPEX and OPEX
Modularity reduces platform training and inventory variations, which contributes to faster carrier ROI. Support and field personnel are trained on a consistent CPE platform that varies by the software feature load and radio Mini PCI module. This lowers the cost of training associated with the CPE and effects OPEX investment with introducing new CPE into service. Mini PCI modularity also favors competitive multi-sourcing procurement for operators. Multiple ODMs will base their CPE designs from a Mini PCI reference design, which creates a high level of performance and interoperability.
Analysis: Trends in CPE pricing
CPE price is very much related to the supply channel. OEMs and infrastructure vendors will supply the operators or operators will source their CPEs directly from the ODMs. We believe that the initial WiMAX market opportunity will follow the OEM path. As the market matures in terms of IOT and standards, the CPE sourcing path will transition to a direct operator/ODM business relationship.
Our survey revealed that Mini PCI modules based on first generation WiMAX chipsets and current RFICs have completed significant IOT and are available from multiples ODMs. However, the current products are not yet close to the $75-$125 price points needed to drive the market towards commodity. Today’s offering is appropriate for early adopters seeking quick market presence and anchoring customers now.
These first generation Mini PCI modules have a moderate BOM and their footprint and power consumption are best suitable for outdoor installations such as DSL extension; a market where most of the OEMs are currently focusing their attention, especially in emerging economies.
The second generation of Mini PCI modules are already under development featuring smaller chip (11x11mm) footprints with significantly lower power consumption (>200mW). Wavesat, for example, has announced their NP7256 expected to become available in the first half of 2007 (see Figure 2). BOM prices are targeted to be reduced in half. This is encouraging as CPE costs finally approach industry targets around $100.
These next-generation products will serve outdoor as well as extended indoor applications featuring sub-channelization, a very small footprint, and total power consumption less than 3 Watts.
New generations of WiMAX baseband and RFIC chipsets are becoming available. Advances in integrated solution development such as Mini PCI are being made that enable the ODM community to establish an optimal build strategy with minimal inventory penalties. Maravedis is therefore optimistic about the future of WiMAX CPE for stationary applications. By leveraging the existing broadband CPE supply chain and the ODM’s skill in mass production, the WiMAX semiconductor manufacturers are making the right steps to lower CPE cost and increase manufacturing flexibility.
About the Authors
Adlane Fellah, MBA, is CEO and founder of Maravedis, a world-leader in market research and analysis, specializing in WiMAX and broadband wireless markets. He is leading industry analyst who authored various landmark reports on WiMAX, broadband wireless and Voice over IP. He is a frequent speaker at leading wireless events and a contributor to various prestigious portals and magazines covering the broadband wireless industry including: Telephony Magazine, WiMAX Trends, WiMAX.com, etc... He is a member of the Program Advisory Board for the World WiMAX conference since 2004 and a member of the Word Communications Association International, and Broadband Wireless Association. Prior to founding Maravedis, he held various positions at Harris Corporation in charge of market intelligence and business development for several product lines.
Jeff Orr is the senior analyst for consumer electronics at Maravedis Inc. Jeff has more than 17 years of corporate and industry marketing experience for high-tech firms. In total, Jeff has managed technology products exceeding $1 billion in revenue. Most recently, he built the marketing organization for the WiMAX Forum industry trade association, launched the WiMAX Forum Certified brand and licensing program, and has served as a board member for the non-profit group. Jeff began his wireless career at industry pioneer Proxim, where he held senior marketing management roles for seven years. His career started at Diamond Multimedia, where he held multiple senior management positions and received more than 200 product-related awards over his 10 years there. An invited speaker at industry trade conferences and seminars, Jeff has been a featured guest on television and radio talk shows. Born and raised near San Francisco in the region known informally as Silicon Valley, he majored in Aerospace and Aeronautical Engineering at Embry-Riddle Aeronautical University and currently resides with his family in the state of Oregon.