Among the Israeli companies at the Mobile World Congress in Barcelona this week is global WiMAX infrastructure equipment leader Alvarion Ltd. (NASDAQ:ALVR). With its current share price at just half its peak of over $15 last October, Alvarion is definitely interesting.
Despite its share price, reports of WiMAX's death are an exaggeration. At the Mobile World Congress, the company will demonstrate to potential customers its WiMAX solution to carry VoIP using a Comverse Technology Inc. (NASDAQ:CMVT) voice platform.
Recent rumors claim that the biggest WiMAX project on the market, which Sprint-Nextel Corp (NYSE:S) and Clearwater Inc. (CLWR) suspended last year, may be revived with the help of financing from giant corporations with an interest in its deployment. On one hand is Intel Corp. (NASDAQ:INTC), which will supply processors for WiMAX-enabled laptops. On the other hand is Google Inc. (NASDAQ:GOOG), which wants to promote any technology that will translate into cheaper access to the Internet from any location.
Alvarion is not a party in this project. The project's announcement last year gave a boost to WiMAX companies, and its sudden suspension a few months ago hurt all stocks in the sector. It was the first trigger that caused Alvarion to plummet. The subsequent market dive resulted in Alvarion falling to half its peak price. Another possible beneficiary of the Sprint's project revival is Ceragon Networks Ltd. (NASDAQ:CRNT), which was to be one of the wireless communications equipment vendors.
Barcelona is the place where WiMAX companies will come face to face with alternative technologies, beginning with 4G LTE. Among the communications equipment manufacturers, Ericsson (NASDAQ:ERIC) is an LTE leader, and among the service providers, Verizon Communications Inc. (NYSE:VZ) IS SOMETHING ELSE. Verizon was recently joined by its competitor, AT&T Inc. (NYSE:T), the largest telephony company in the US.
Minnow among the sharks
In the wake of the largest media blitz that I've ever seen for an Israeli gadget, Dov Moran has unveiled Modu Ltd. at Barcelona. Media comparisons with Moran's previous fantastic invention - the DiskOnKey [DOK] - are misleading, in my view. The DOK created a market from nothing. There was almost no market at all for the first few years, and there were no competitors with a similar product either. They only emerged when the market took off. As M-systems' quarterly financials showed, that took a good many years.
Being first to market and creating that market is what led to DOK's fantastic success. In contrast to the DOK, Modu was launched into an existing market that has an incredible 1.2 billion devices a year and it is going to swim in waters infested by sharks like Nokia (NYSE:NOK), Samsung Electronics Co. Ltd. [KSX: 5930], and Sony Ericsson Mobile, which can eat Modu as a snack. That is why I am not at all optimistic about its success. Furthermore, a new product succeeds because it immediately and effectively meets needs that no other product can provide. For example, the DOK replaced the limited and clumsy floppy disk.
It is possible that I am not yet aware of Modu's full potential, but on the basis of what I've seen, I don’t see any need that it fulfills that are not effectively filled by other products on the market. This is even before taking into account the iPhone, which Moran himself says he cannot compete with. He is aiming at a market beneath him.
Another point that ought to be remembered is that, in contrast to the DOK, which is no more than an aid, for many people, especially the young, the cellular telephone is a sexy toy, a status symbol, and many other things from the world of psychology.
I have laid down my reservations about the chances of success of Modu, even though I personally know about Moran's stubbornness and genius.
Published originally by Globes [online], Israel business news - www.globes.co.il
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006. Republished on Seeking Alpha with full permission.