Endeavour Partners - Blog

This morning at 4G World in Chicago, Bill Morrow, CEO of Clearwire, described the need for 4G networks to support bandwidth hungry applications on smartphones, and we can’t agree more.

He demonstrated the difference between an iPhone’s performance using AT&T’s 3G network and an iPhone using WiFi to connect to Clearwire’s 4G WiMax network.  The difference was impressive:  Clearwire’s network performed beautifully for both streaming video and Google Earth, while AT&T’s network was sluggish.

Unfortunately, it is exactly this need of 4G smartphones for data capacity that will likely spell the downfall of WiMax.  By our estimates, smartphones will be responsible for roughly 50% of mobile data traffic within the next five years.  But the iPhone is not available with WiMax – and neither are any other mainstream smartphones.

Yesterday Kris Rinne opened the 4G World conference by laying out AT&T’s plan to forego HSPA+ and move directly to LTE, with commercial rollouts beginning in 2011.  This is slightly behind Verizon’s aggressive LTE deployment across 20-30 markets planned for late 2010.  The iPhone, RIM’s BlackBerry, Windows Mobile devices, and a wide variety of Android devices will all be available to run on these LTE networks.

WiMAX is a great technology, but the window of opportunity is short.  Ultimately, the availability of leading smartphones, apps, and content will determine 4G winners and losers.

One of my pet peeves is when people who should know better mis-spell Vodafone and Vodaphone. Shortening it to Voda is OK, but makes me think of the Star Wars Jedi Knight – and then the Weird Al song. Anyway, one of the things that makes competition in high-tech so interesting and challenging is that it is often not just ‘horizontal’.

Let me illustrate this with an example from DigiTimes this morning:

MediaTek and Vodafone have jointly announced that Vodafone has selected MediaTek chipsets for two new devices. The strategic partnership with MediaTek provides Vodafone with the opportunity to offer the Vodafone 340 camera phone at a very affordable price as well as its first entry level, low-cost touch screen device for prepaid customers – the Vodafone 541, Vodafone said.

Vodafone 541

This is one of eight Vodafone branded ‘phones launched today.

‘Horizontal’ competition is two similar businesses competing with one another for market share:

• Vodafone competing with FT-Orange in the UK
• Verizon competing with AT&T in the US

‘Vertical’ competition is when businesses compete for value capture, their share of the pie, rather than for market share amongst customers. Here Vodafone is partnering with MediaTek for chipsets, but effectively competing with other mobile phone vendors, such as Nokia, for some of the value created.

Competition can in fact be ‘diagonal’ or asymmetric, when it is amongst businesses that have fundamentally different scope of activities, or business models. Think Google giving away stuff free to generate ad revenue, competing with Microsoft’s packaged applications business.

Much of the competition in the mobile and broadband sector now takes this form; watch this space for more commentary…