Samsung: The Teacher’s Pet

This article is part five of a six-part online series that culminated with a final analysis feature in Oct. 9 issue of Telephony. The other parts in this series can be found on our WiMAX World page.

If you’re an operator with a hankering for WiMAX, Samsung is aching to get your attention. And Samsung is hard to miss. Like the kid who brings the apple to class and raises his hand at every question, Samsung is doing everything conceivable to draw attention to its WiMAX portfolio. While other vendors set commercial availability dates for their WiMAX base stations, Samsung points to the commercial WiBro network up and running in Korea. While its competition makes vague references to PC cards coming out sometime next year, Samsung whips out half a dozen WiMAX handsets with promises of more.

Intel is often cited as the big booster of WiMAX, and the chipmaker has probably done more than anyone else to make a business case for the technology. But Samsung has committed itself to bringing the technology to market, going beyond concept and marketing hype to launch real networks and produce functioning devices. Samsung has received accolades for its gumption—most notably a prized spot in Sprint’s multibillion-dollar WiMAX rollout—but it’s also taken some flack. Its WiBro networks didn’t work as well as the industry hoped, and its handsets may resemble, a little too much, the 3G mobile phones from which WiMAX is trying to differentiate itself. But in a telecom industry where commercial products usually trail their press releases by years, what Samsung has done is nothing short of astounding.

While Samsung owes a lot to its own tenacity, its vice president of wireless broadband, Tom Jasny, acknowledges that its early success with WiMAX comes from the lucky fact it is the hometown vendor in one of the more technological progressive markets in the world. The Korean government allocated the 2.3 GHz spectrum that spurred SK Telecom and wireline provider KT to deploy an early version of IEEE 801.16e-based technology, WiBro, giving Samsung both a live test bed in which to fine tune its portfolio and a display network to show off to other potential customers.

“We’ve had a lot of opportunities to participate aggressively and early in some of these newer technologies in the Korean market,” Jasny said. “Our Korean deployments ensured a sustained investment effort with a commercial deployment at the end as opposed to a trial. It allowed real commercial discussions with other operators.”

Those initial Korean deployments led to more trials in other countries, plus Samsung’s selection to deploy a boutique broadband wireless network for the 2006 Winter Olympics in Turin, Italy, and, eventually, its contract win with Sprint last summer. And while WiBro still technically remains an uncertified technology until the WiMAX Forum completes its performance and interoperability trials later this year, Samsung is the only vendor to have recorded revenues from Mobile WiMAX on its balance sheet.

Whether luck or determination brought its initial success, Samsung is certainly playing those early advantages to the hilt. It will need to. While few, if any, would consider Samsung an underdog in WiMAX, its other efforts in network infrastructure sales have hardly been successful. Samsung is known in the telecom world for its handsets--it’s the third largest maker of cell phones globally—but its networks division has made little impact outside of Korea, despite repeated attempts to break into the North American infrastructure business. The company certainly hasn’t been short on innovation. It built the world’s first commercial CDMA 1X and 1X EV-DO networks in Korea, but still failed to chisel away at Lucent Technologies’ and Nortel Networks’ dominant lead in CDMA. Jasny said, however, that WiMAX represents Samsung’s biggest opportunity yet to burst into the global infrastructure market in a very big way—and the company isn’t letting that opportunity pass.

“Samsung was very late in infrastructure in this market, and we didn’t get share in the U.S.,” Jasny said. “WiMAX should be a new multibillion-dollar business globally. When there is a major discontinuity in the market place there is always an opportunity for a new vendor.”


While other vendors highlight technological capabilities and bells and whistles that distinguish their platforms from their competitors, Samsung is one of the few manufacturers prepared to admit that the well-defined 802.16e standard and the WiMAX Forum’s rigid certification timelines will mean little technical differences between products. “I’m not convinced we’re doing anything another vendor couldn’t do,” Jasny said. Samsung is submitting its WiBro technology to the Forum for the first wave of Single Input/Single Output certification this fall as are its competitors. It also has plans for a Multiple Input/Multiple Output smart antenna system in the works, but just like the other vendors trumpeting availability of the technology today, Samsung has to wait for the Forum’s wave 2 certification next summer.

Instead of technology, Samsung is focusing on the breadth of its portfolio, insisting that it is the only vendor that can supply an entire solution from the tiniest silicon baseband chip to the core. Supplying an end-to-end solution to a Tier 1 operator, however, involves scale, not just scope, and Samsung’s claims in that area may ring a little hollow to some carriers. While Samsung has some sizable network wins in Asia, they are nothing compared to global CDMA rollouts of Nortel Networks and Lucent Technologies, the DSL and optical dominance of Alcatel or the UMTS and GSM wins of Nokia. And while Samsung is definitely considered an innovator in the radio access network, its name doesn’t even come up when talking about the network core, said Peter Jarich, wireless infrastructure analyst with Current Analysis.

“They’ve definitely done some impressive stuff in Korea, but they’re certainly not in the same league as the other guys,” Jarich said.

Samsung, however, does make a convincing case for scale on the CPE side. In fact, Samsung’s and Motorola’s ability to ramp up production of handsets was likely one of the key reasons why Sprint selected the two vendors as its initial vendors, Jarich said. In the device space, Samsung even has a leg up on its American counterpart, despite the fact that Motorola’s market share dwarfs that of the Korean manufacturer. While Motorola has committed to developing CPE devices, Samsung has already shown off devices at trade shows for the last year, including some concept phones, but also some handsets commercially deployed over networks in Korea. Samsung also has the advantage of being a consumer electronics maker as well as handset manufacturer, making everything from huge flat screen TVs to tiny digital music players. If WiMAX becomes the “personal broadband” market many of its proponents envision, then WiMAX devices won’t be the typical handset form factor. Instead, WiMAX will be embedded in iPods, in digital cameras, in PDAs and personal multimedia devices.

While Sprint selected Motorola and Samsung in part for the ecosystem they bring, Sprint Vice President of Broadband Bin Shen stressed that their contracts were only infrastructure deals. Sprint already has a robust 3G network and PowerVision mobile data service to support traditional handsets, Shen said, so the type of device it will look for on its new “4G” network will be something else entirely. To that end, Shen said, Sprint is pursuing separate partnerships with Intel and consumer gadget makers to directly spur innovation on the device side.

“On the other hand, I don't want to shortchange Samsung and Motorola,” Shen said. “Samsung is one of the largest consumer electronics manufacturers in the world, and Motorola is a dominant device maker.”

Even if Samsung manages to leverage its consumer electronics division into a robust WiMAX device business, it doesn’t mean the Korean company will continue its momentum on the infrastructure side. Once other devices are certified and Intel manages to sell its chips to the Sonys, HPs and Apples of the world, the devices and the networks will take off on different trajectories, which could put Samsung in the same position it’s in now: A dominant handset maker but an also-ran infrastructure supplier.

WiMAX, however, is Samsung’s best chance to turn the trend around and become an equipment supplier on the global scale, Jarich said. While Samsung’s history in that space may leave much to desire, its momentum in WiMAX could easily wipe away those black marks in the eyes of many carriers. Samsung’s early Korean deployment begat early trials in other parts of the world, which in turn led to its Sprint contract win. If the attention focused on Samsung through Sprint leads to a few more deals, Samsung stands to benefit from a huge snowball effect that could put it at the top of the vendor heap, Jarich said.

Keeping operators’ attention focused on Samsung during these critical first phases of WiMAX shouldn’t be difficult. Sprint’s commercial rollout of Mobile WiMAX won’t go into full swing until 2008. Other carriers are still in a holding pattern on the technology. And the first certified mobile products won’t be available until next year. That’s a long period of inactivity, but during that entire spell, Samsung can point to its live networks in Korea.

“The performance on those networks is pretty crappy, but it’s a new technology, and I think everybody understands that,” Jarich said. “What’s important is that with Qualcomm and others saying that there are no working Mobile WiMAX networks or business cases, Samsung stepped up and built that network. It proved the technology can work.”