2010 Prediction: A Mix of WiMAX Smartphones and Low-Cost Devices to Emerge

By Guest Blogger Pascal Deriot, Senior Analyst & Partner, WiMAX & LTE Equipment, Maravedis

In a recent interview, Sprint CEO Dan Hesse commented that not only was its network up and running, but its compelling and cool devices, such as dual-mode 3G/4G smartphones, will make WiMAX a successful adoption. On the same front, Clearwire CEO Bill Morrow explained that the second stage of Clearwire’s business model, targeting the PDA/smartphone market, is to happen in the second half of 2010. Although Yota has proved that smartphones can be a great vehicle to promote the fantastic bandwidth capability of the first 4G technology, we also project that the cost of the WiMAX platform is another angle that needs to be considered.

As previously seen in Wi-Fi or 3GPP/3GPP2 markets, WiMAX chipset vendors have leveraged their first or second generations to further reduce chipset costs by migrating to a smaller geometry process node, and/or by introducing monolithic dies. At the same time, new packaging approaches, such as System-in-Package and optimized Bill Of Material (BOM), have significantly reduced the footprint of the WiMAX platform, allowing device manufacturers to launch a new generation of products that are more appealing, integrated, and that combine 3G and 4G standards.

The new research report released by WCAI member Maravedis in partnership with Reveal Wireless, “WiMAX Wave2 Subscriber Station Chipset Vendors Competitive Analysis” provides a detailed comparison of the key WiMAX chipset vendors, identifying system architectures, estimating chipset and system BOM, and cost of available devices such as CPEs, USB dongles or Express Cards. One of the report’s major findings is that WiMAX mass-market adoption may require sub-US$10 chipsets that are power and performance optimized for each application-specific segment. Maravedis and Reveal Wireless have identified three chipset vendors best positioned to achieve the US$10 price target through base-band and RF monolithic die integration in 65-nm.

Although most of the available chipsets are not highly optimized because they were compelled to cover a broad range of application segments, an additional study revealed that device manufacturers could build a basic WiMAX USB dongle solution for as low as sub US$50, while maintaining healthy profit margins. The figure below presents the breakdown of the cost of the USB dongle: the electronic BOM (eBOM) is composed of all the platform components, excluding the chipset. A basic USB dongle platform can be divided into 3 main sub-systems: base-band, RF and power management sub-systems, bringing the component count to 150-200 components. The rBOM, also called sometimes mBOM, defines the mechanical Bill-Of-Material. It contains the non-electronic components such as connectors, USB plug, antennas, PCB, housing, shielding or screws. Our total manufacturing cost estimation includes the labor cost, profit and SG&A. According to our research the WiMAX chipset, by its complexity and silicon die size, represents 44% of the total cost.

Moreover, our analysis shows that a combination of an aggressive Bill-Of-Material reduction by 20-30%, combined with a second generation chipset and higher production volumes, could further shrink the cost of the USB dongle by roughly 20%, providing a sub-US$40 product in 2010 time-frame.

We believe that WiMAX mass-market adoption requires a ubiquitous coverage and technology maturity, a mixed portfolio of appealing, integrated and low cost devices, and competitive WiMAX chipsets. We have no doubt that all these ingredients will be ready next year contributing to a fantastic growth of the WiMAX market, in all regions.

MARAVEDIS is a leading analyst firm focusing on disruptive technologies including smart networks using WiMAX, IEEE, and 3GPP/LTE. For more information about Maravedis, please visit http://www.maravedis-bwa.com/ or contact info@maravedis-bwa.com.