Nortel exits mobile WiMax to focus on high-return tech

Nortel Networks is dropping out of the mobile WiMax business entirely and will end an agreement with Israeli-company Alvarion to resell Alvarion mobile Wimax gear.

Richard Lowe, president of carrier networks for Nortel said in a statement issued Thursday night that the move is in line with Nortel's actions to focus on areas that provide "maximum return on investment." He said Nortel plans to work with Alvarion to move Nortel's mobile Wimax customers to Alvarion. Nortel first announced plans to work with Alvarion in June.

Nortel filed for Chapter 11 bankruptcy in early January.

Analysts, meanwhile, said it makes sense for Nortel to drop out of mobile WiMax.

Mobile WiMax "has not caught on yet, and in this economy, who knows when it will," said Zeus Kerravala, an analyst at Yankee Group. "In the short term, it makes sense for Nortel to do this. However, it is an emerging area that they'll miss out on in the long term."

Phillip Redman, an analyst at Gartner, called Nortel's exit from mobile Wimax an expected move. "Without adding any value over the product you are reselling, it is difficult to profit," Redman said.

"It has been typical of Nortel in the past years to enter markets without any strategy and then leave. It is an endemic problem and one that needs to be resolved if there is any hope of recovery. It starts from the top down, and the company needs a vision and focus in order to survive."

Nortel said it still remains committed to fixed WiMax, which is a separate technical specification from mobile WiMax. Fixed Wimax refers to technology that could be attached to a home or office complex to provide a wireless signal to users inside or nearby, while mobile WiMax refers to WiMax antennas that work while moving, such as in a car.

Nortel also said it will continue to drive LTE technology, and a spokesman called LTE the "technology that established operators are looking to in order to meet growing demand for mobile broadband services." Nortel has trials of LTE with Verizon Wireless and T-Mobile USA and has won a contract for LTE core equipment with Japanese carrier KDDI in that country.

LTE is widely considered the principal upgrade to GSM networks, which dominate wireless networks globally.

Mobile WiMax is backed by Clearwire in a joint venture with Sprint Nextel, Intel, Google and three cable companies.

WiMax is also expected to do well in emerging countries where many rollouts are underway, Kerravala noted.

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