An excellent summary of WiLan on the Stockhouse board.|
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mbeckr (ID#: 76316) Pros vs. Cons for Cisco and Wi-Lan 11/30/99 12:24:43 PM 624777
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Hi everybody . . .
Although I'm very long on Wi-Lan, I just wanted to list a few pros and cons regarding the competing W-OFDM (Wi-Lan's wideband orthogonal frequency division multiplexing) and V-OFDM (Cisco's vector orthogonal frequency division multiplexing) technologies. It appears as if many here have no clue about what they came to own when they bought WIN (or what they're going to have to buy, eventually, if they're short.)
I've tried to limit the following points to the technology only, although I've included some pros and cons that weigh market and industry support for each technology.
Please correct me if I've made errors in any of this:
Cisco's plan is to deploy V-OFDM. Cisco has the following ADVANTAGES:
1) VOFDM does not require line-of-sight transmission because it uses microwave frequencies.
2) VOFDM allows "signal-bounce" off obstructions (buildings) etc.
3) Potential advantage: VOFDM may allow, under certain conditions, a more rapid signal synchronization. Idle hardware when re-activated will more quickly synchronize to VOFDM signals. (This advantage is a matter of fractions of a second over WOFDM.)
4) Broadcom and Texas Instruments are lined up to produce wireless broadband chips. These players can borrow heavily from their experience producing cable-modem chip sets to reduce costs.
5) A consortium of 10 industry heavyweights have banded around Cisco, including Broadcom, Motorola and Texas Instruments.
Cisco is faced with the following DISADVANTAGES:
1) Slow: VOFDM is relatively slow and is currently limited to 11 Mbps.
2) Inefficient: VOFDM signals are susceptible to multi-path fading (loss of signal) and require enhancement using an antennae network. The disadvantage of a network of antennae is higher deployment and operating costs (you must maintain a network of antennae), in effect defeating the purpose of a wireless network.
3) Cost: Microwave frequencies are inefficient and require a lot more power. Signal enhancement also requires greater power output at the source, and, more importantly, at each antenna station. The disadvantage is again higher operating costs.
4) There is no product until next year.
5) There is the possibility that Cisco's V-OFDM technology MAY infringe on Wi-Lan's W-OFDM patent. (Does anyone know if this is in terms of how the OFDM signal is achieved, or if the actual Wi-Lan concept of "pre-whitening input data" and "combining channel estimation with forward error correction" is at issue? In other words, does VOFDM pre-whiten and forward-correct?)
Wi-Lan already deploys W-OFDM technology using their own hardware, and by licensing the technology (Phillips Semiconductor).
Wi-Lan's ADVANTAGES are:
1) Faster: WOFDM technology is fast. 30 Mbps is currently deployed and 90 Mbps has been successfully tested. Speeds beyond 155 Mbps are envisioned.
2) Cheaper: WOFDM signals have higher bandwidth efficiency. This means the signal is clearer and functions well on much low power requirements than VOFDM. The signal requires less processing at each end, translating into higher speeds (greater than 155 Mbps is possible). This translates into much lower operating costs.
3) WOFDM signals are resistant to multipath fading. For larger networks, WOFDM requires low-power (i.e. low-cost) repeater stations to boost the signal vs. a network of high-power (high-cost) microwave antennae for Cisco's V-OFDM technology.
4) Wi-Lan's patent is bullet proof. They infringe on no-one.
5) WOFDM technology is available and deployed with upgrades to 90 Mbps around the corner. Wi-Lan's technology is currently in use and gained credibility when Phillips chose to license WOFDM and not VOFDM.
7) Popularity and support: Lucent, Nortel, Ericsson, Phillips, Nokia--these are only some of the names that will attend Wi-Lan's meeting. Notably, an ally of Cisco's--TEXAS INSTRUMENTS--will also be at Wi-Lan's meeting, despite having been named as part of the Cisco consortium. In terms of impact on the market and the industry, these companies outweigh the Cisco effect.
Wi-Lan is faced with the following DISADVANTAGES:
1) WOFDM requires line-of-sight transmission. This can be a pain in the neck when it comes to negotiating roof-top leases, etc. However, keep in mind that the cellular industry was faced with the exact same problem and hasn't been hurt by non-line-of-sight technology. In fact, you have only to see what happened to Iridium's non-line-of-sight satellite system to see what can happen when a small technological advantage is overwhelmed by cost-of-implementation.
2) Although much cheaper to install and operate, signal repeater stations are still required for WORDM networks with greater than 10-mile spokes.
3) Potential disadvantage: Under some conditions, idle hardware when re-activated may be slower to synchronize to WOFDM signals (this is a disadvantage that is measured only in terms of fractions of a second).
4) Cisco is still Cisco. Big, bold and brash, and with a lot of money to spend.
Both VOFDM and WOFDM allow voice local-loop and broadband Internet access from a common platform.
None of the above pros and cons take into consideration any non-OFDM technologies that Wi-Lan owns. For example, Wi-Lan has also submitted for consideration a proposal to adopt Multi Code Direct Sequence Spread Spectrum (MC DSSS) as a standard in the cellular industry. MC DSSS is an improvement on QCOM's CDMA technology in that it allows each individual cellular user to be assigned multiple codes (to CDMA's single code). This translates into logarithmic increases in cellular transmission efficiencies (higher efficiency = cheaper cost), as well as reduced signal interferences. In short: Faster, cheaper technology. Although I'm not aware if MC DSSS requires licensing of CDMA technology, as a stand-alone concept MC DSSS alone is worth the sam--if not more--than W-OFDM.
THE PSYCHOLOGY OF HOLDING WI-LAN
I hope this helps some of you nervous longs understand a little better just what you have decided to buy.
In my view, the Wi-Lan story is only now beginning. I am confident that yesterday's spike in the stock chart will be viewed eventually as a small blip in the run to higher prices. While I was excited by what the market perceived in the past few days, I am doubly resolved to hold my shares until the story is complete. In fact, I slept better with the correction in stock prices back to the 30's than at the lofty altitudes of the 40's. Too high, too fast.
The simple truth of the matter is: Wi-Lan only just appeared on the scene. This is the beginning of the story, regardless of the outcome of the situation between Cisco and Wi-Lan.
If you are willing to look past Thursday's meeting, you will see a company that has aligned itself with the majority of the industry's big players. Cisco ain't the only game in town--did anyone expect a unanimous congregation of all players around Wi-Lan's concept?
If you can get past the euphoria you will profit immensely in the coming years from hanging onto Wi-Lan now. As a holder of the stock from $2.52 on the ASE last spring, believe me: Watching it double lately has been plenty exciting, and I did lighten up on my non-RSP load considerably. But the smartest thing I ever did was transfer the majority of my shares to the RSP, where if you're young enough you can adopt a more patient attitude to your investments. This is a core holding, an investment, that I intend to hold until the story is over, come hell, high water or Cisco.
Good luck everybody.