Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry. In the coming weeks look for columns from NPD Group’s Ross Rubin, Enderle Group’s Rob Enderle and more.
Explaining his plans to meet up with a certain femtocell vendor at Barcelona’s Mobility World Congress, a colleague declared, “home base stations are a hot topic and after an investment from [insert major telecom brand here] they must be poised for success.” I wasn’t about to argue, but the assertion got me thinking: If I had a few bucks to invest – and wanted to invest in a femtocell vendor — where would I place my bet?
Last month, I took some flack after suggesting that femtocells were, “over-hyped.” Today, I’m constantly on the lookout for the Femto Forum’s snipers ready to take me down. For the record, I believe that femtocells will get deployed and will help to move fixed-mobile convergence (FMC) forward. What I don’t believe is that significant commercial momentum will occur this year. Instead, trials will take place. Operators will gain some insights into femtocell business models. Femtocell vendors will earn limited bragging rights. Here, however, things break down a little.
In the mind of your average marketing department, deployments translate into an opportunity to claim, “market leadership.” It may be a pretty fuzzy term, but I have no doubt we’ll see it pulled out a few times this year; fuzzy things, after all, are endearing (puppies, teddy bears, Chewbacca). That said, trying to pick a market winner today is like predicting the Super Bowl winner after the season’s first game or two. That worked out well this year, didn’t it? Of course, many well-paid prognosticators do just that. some making their picks before the season starts.
In the hopes of being well-paid myself one day, I figure it’s worth a shot. And, since I know more about femtocells than football, I figure that’s where I’d want to put my money. To be fair, I’m also no stranger to this type of exercise; though I don’t like to talk much about my work (it tends to put people to sleep), product assessments and solution assessments are a core component of what we do at Current Analysis. Based on the concept of an operator’s “buying criteria” the question then becomes: What would someone looking to launch a femtocell service be looking for in a potential vendor and their product offer?”
Basic performance: Like any other telecom product, femtocells will be judged on how well they meet a specific set of performance requirements — all of the stuff that appears on a standard datasheet: transmit power, receive sensitivity, user capacity, data capacity, size, etc. In some cases, these will be deal breakers. In many cases, a vendor’s basic understanding of the market and the fluidity of early femtocell business models means that products will likely provide the basic features that operators want.
Handoff and interference mitigation: Beyond basic feature sets, operators will want their femtocells to interact with a larger wireless network. For my wife (the end-user) this means that when she leaves home, gets to her car, realizes she left the keys in another coat and then comes back inside, she doesn’t lose her call. For her service provider (the network operator) this means that a $200 home base station shouldn’t have the power to mess with a multi-billion dollar macro network investment or complex, optimized network architecture. These capabilities won’t get measured by datasheets. They’re more likely to represent the “secret sauce” a vendor brings to the table in attempting to set their products apart — a good thing given the importance to operators.
Silicon strategy: Silicon, I’m told, is a building block of sand. It’s also a building block of the chipsets that run femtocells. and that’s right about where my knowledge of the topic ends. Operators, however, are generally smarter than I am. This means that they’ll be looking for femtocells built from stable, reliable, flexible and (ideally) cost-effective silicon platforms.
Mobile core strategy: Since its inception, the Femto Forum has made a goal of narrowing down (harmonizing?) the various options for integrating femtocells into an operator’s mobile core. It’s a laudable goal to the extent that a myriad of options hinders scale. The market, however, will never converge on one, ultimate standard; based on diverse network assets, no one standard can meet all operator demands. The options a vendor supports will clearly dictate its attractiveness to an operator, meaning that more flexibility is a good thing.
Partnerships and expertise: We can all agree that a complete femtocell solution requires home base stations as well as a method for integrating them into an operator’s mobile core. Anything else? How about billing solutions, device management capabilities, manufacturing capabilities (including set-top or gateway integration), enterprise insights, system integration capabilities. If a vendor doesn’t have these in-house, partnerships will be necessary.
Stability and longevity: I was once at a conference where an analyst chided operators for being too cautious and unwilling to take risks. Briefly, I admired him for his insight and chutzpa… until operators in the room put him in his place. You see, after spending billions on their networks and brands, service providers have good reasons for being risk-averse. Where market consolidation will eventually cull some startups from the market or drive larger vendors to reconsider their femtocell R&D, the potential risk to an operator’s investments and rollout plans is clear.
Commercial momentum: A history of deals inevitably influence’s any vendor’s position with operators. Simply being in the news — especially as a part of high-profile deals — raises a company’s profile, introducing it into new accounts. More importantly, it suggests that the company is credibly executing on all of the other buying criteria. “If they’re good enough for Vodafone, they’re probably good enough for me,” isn’t that unreasonable, is it?
Ultimately, momentum may be more important than any of the other criteria. Why? While every femtocell vendor will claim that they’ve got the best products, best partners and best understanding of the market, customer wins and endorsements are one of the few ways to back up these claims. Hats off, then, to all of the fuzzy marketers who get as much mileage as possible out of early femtocell momentum, treating every win (no matter how big or small) as an endorsement while not losing sight of the fact that deal-flow is not sustainable unless the right strategies and R&D are in place.
Questions or comments about this column? Please e-mail Peter at pjarich@currentanalysis.com or RCR Wireless News at rcrwebhelp@crain.com.
