NextWave remains a conundrum, purely because it makes so much noise, in such a promising market. At present its revenues seem to inch along, without any massive design wins, it picks up revenue slowly but surely, and last quarter showed its run rate to be considerably ahead of $100 million for the year as its WiMAX chips finally cut in with significant gains. At current cash burn rates, it will probably take the best part of two years before the company is cash break even, as a pure chip company, continuing on its path to emulate the rise of Qualcomm, the company that founder Allen Salmasi was part of before he founded NextWave.
This week was all about a major push for NextWave in Taiwan, a country of just 23 million people, and considerably more mobile devices.
The first deal is with Global Mobile Corporation, a WiMAX operator there which announced a technology collaboration agreement with NextWave which amounts to a field trial and demonstration network in Taipei, Taiwan for Global Mobile’s new WiMAX network.
The idea is to show of the kind of next generation mobile multimedia experience that NextWave has claimed all along that it can deliver and this will include base stations built around its V5 base station design, with its extra proprietary bells and whistles and software for interference management, as well as its MXtv multicast mobile TV system.
Global Mobile, by its name, clearly has wider ambitions than just Taiwan, and last year it tapped Rosemary Ho the local Hewlett Packard boss as its founder and CEO, after raising funds targeting mobile content services.
This deal echoes what we said at the time of the launch of MXtv, which is that it is the first company to be able to turn WiMAX networks into triple plays and that it could potentially become the de facto standard in WiMAX television services.
However that has never meant that it has to offer MXtv on its own base stations, or on devices which have its CPE chips in them. MXtv is really a software implementation on top of MBS, the IEE802.16e version of a multicast system, somewhat akin to the way NextWave’s TDtv which sits on top of MBMS in cellular UMTS systems.
TDtv system had its breakthrough at Mobile World Congress, when after years of trials Orange and T-Mobile agreed to move to a 2,000 user commercial trial covering a good chunk of central London, in the UK. Now MXtv seems to have its first implementation.
Initially NextWave set out to convince other base station suppliers to use the MXtv software and bundle it, and its best wins have been at Huawei and Alcatel. However that doesn’t mean that any of the Alcatel and Huawei customers are going to use the software, without some example of what it can do, and the Global Mobile deal seems to be that key reference site.
The system will deliver as many as 45 mobile TV channels in Quarter VGA at 30 frames a second, each taking up around 300 Kbps, in a single 10 MHz WiMAX channel. It also offers channel switching times of under 2 seconds and is entirely flexible on how much of the spectrum it dedicates to Mobile TV, and how much it uses for other applications.
MXtv is based on what are being called ‘Wave 2’ WiMAX base stations which implement the MBS (Mobile Broadcast Services) part of the 802.16e standard.
But NextWave has added 3 or 4 things extra to the basic MBS services, one of which creates spectral diversity benefits taking more than one signal from surrounding base stations and putting them together with an onboard diversity engine to improve transmission and in-building penetration. However our understanding is that this diversity needs to be implemented in silicon, so that if multiple suppliers take the MXtv software for their base stations, this virtually guarantees chip sales to device manufacturers.
NextWave also brings its Packet Video Media Fusion Platform, which provides handset side and server side ESG data, search and navigation, and a dynamically constructed electronic service guide, and addressable advertising management.
So the second Taiwan announcement is even stronger, in that a local device maker, dmedia System has teamed up with NextWave to incorporate its chipsets into a Mobile Internet Device called the G400 which will be ready in the first half of 2009. dMedia has really so far only been involved in GPS devices, but exports them throughout the world.
It is only a matter of time before one of the major handset makers takes a look at least at the NextWave SoCs for WiMAX handsets
It can be no co-incidence that the two deals were announced two days apart, and we would expect the dMedia devices to appear on the Global Mobile network at some stage.
NextWave claims its NW2000 CPE chipset is optimized for low power, high levels of integration, to work with bandwidth-intensive multimedia applications ‘ for that read MXtv, streaming video, video conferencing, and Voice-over-IP ‘ in other words a full triple, or quadruple play since it is also mobile.
NextWave says it has only begun to sample System Development Kits for the NW2000 family of chips last quarter, so a first win was about due.
NextWave must have beat out a host of WiMAX base station and CPE chip makers for this contract in Taiwan, including market leaders like Alvarion and China’s Huawei, to which it is a supplier ‘ a feat that should not be underestimated given their multiple year head start.
Last quarter the cash burn at NextWave was $79 million for the quarter, with $13 million of that being in interest. If the company complete the sale of its US Spectrum , and pays down some of that debt, and continues to rein in costs, and lift revenues it could be a $200 million break even company in around 18 months, maybe sooner.