Cisco Systems will stop developing and making WiMax base stations to concentrate on the IP (Internet Protocol) networks that sit behind them.
Cisco acquired Navini Networks, which made WiMax RAN (radio access network) equipment, in 2007. The dominant IP networking company said at the time that it saw a powerful opportunity to bring broadband Internet access to developing countries through WiMax.
However, despite hitting the market first, WiMax has taken a back seat to LTE (Long-Term Evolution) as a 4G (fourth-generation) mobile technology. LTE is backed by the industry body behind GSM (Global System for Mobile Communications) and is on the road maps of most major carriers that have chosen a 4G system. In the U.S., Verizon Wireless plans to launch LTE commercially this year and AT&T will follow next year.
Cisco can serve both markets with products it acquired through its purchase last year of Starent Networks, which made gateways between radio networks and a carrier's core IP infrastructure. Both WiMax and LTE are based on IP packet networks. In order to concentrate on this business, the company will get out of making the actual radios that deliver WiMax signals to subscribers' devices.
"Cisco's mobile strategy has always been to provide a radio-agnostic approach that focuses on the packet core and IP network, where the company can add differentiated value. After a recent review of our WiMax business, we announced a decision to discontinue designing and building new WiMax base stations and modems, and we also announced a support plan for transitioning existing customers," Cisco spokesman Jim Brady said Friday.
The Navini products haven't played a big role in high-profile WiMax networks. Cisco is a supplier to the world's largest WiMax network project, Clearwire's national U.S. buildout, but only with IP equipment, not radios.
Analysts called the Starent acquisition a move away from WiMax toward the larger LTE market. Unlike WiMax, which had its roots in the wireless LAN world, with strong backing by Intel, LTE is dominated by the giants of cellular equipment, such as Ericsson and Alcatel-Lucent. Cisco has said it does not intend to compete with those types of vendors.
Analysts were not surprised by Cisco's announcement.
"Cisco pulling out at this moment looks like good business," said analyst Laurence Swasey of Visant Strategies. He believes LTE will dominate the 4G world and may even be adopted by current WiMax carriers eventually.
Cisco did the WiMax industry a big favor by buying Navini, Swasey said. "It was a stamp of approval at a time when the market was very fragmented as to what 3.5G and 4G would be to the masses," he said. Today, several major vendors, including Huawei, Samsung and Motorola, are supplying RAN equipment for commercial networks. Cisco's decision to get out of the business will have far less impact than its choosing to get in, Swasey said.