French WiMax startup Sequans Communications is casting itself as David against an industry full of Goliaths—and the tiny company has a strong chance in this new and unpredictable market.
“We’re focusing on fixed and mobile broadband wireless—what’s referred to as IEEE 802.16 or WiMax, or WiBro to the Koreans,” says Bernard Aboussouan, Sequans’ vice president of Marketing and Business Development.
Half of the company’s current roster of 35 employees came from Pacific Broadband, which was acquired by Juniper Networks in 2001. In 2003, Georges Karam, a vice president at Juniper, left the company to create Sequans Communications, which was initially funded with Karam’s own money. Subsequent funding rounds have given Sequans additional financing totaling more than eight million Euros.
Sequans’ aim, Aboussouan says, is to provide the same kinds of chips that Intel, Wavesat, Fujitsu and others are planning to provide for fixed and mobile WiMax. One of the company’s key differentiators is the fact that it will be providing chips both for base stations and for subscriber stations. “We believe it’s very important to work in both ends,” Aboussouan says. “If you look at the success of Broadcom in the cable modem business, it was because they were providing both the CMTS
Similarly, Sequans plans to provide both the PHY (physical) layer and the MAC layer on its WiMax silicon—which Aboussouan says will help to speed development. “When you go to the large equipment vendors like Alcatel or Siemens, the fact that you can provide the whole package of PHY and MAC minimizes their development, so they can come to market with a product much more quickly,” he says.
The company’s third differentiator, Aboussouan says, is the fact that it’s going beyond the mandatory functionality of WiMax to provide optional features that improve quality of service, extend cell coverage, and increase capacity per cell. “That means the economics are a lot better for the operator, so he can have much larger cells—he doesn’t have to deploy as much infrastructure, and the cost per user is smaller,” Aboussouan says.
Sequans is initially focusing on fixed WiMax (802.16-2004), with the aim of working towards mobile 802.16e as quickly as possible as the standard matures. “Our mobile development is initially targeted towards the Korean space—which is WiBro—because we believe that ultimately WiBro is going to be the first deployment of mobile WiMax applications,” Aboussouan says.
The Koreans’ aggressive development of WiBro technology, Aboussouan says, will serve as a test for the rest of the world. “If Korea is a success, then there’s a good chance that the rest of the world is going to be a success,” he says. “If Korea is a failure, then I don’t think we’ll be talking about WiMax five years from now.”
The company is currently shipping “pre-WiMax” FPGA
Beyond that roadmap, Aboussouan says, the company will work on further reducing size and power consumption, and will add integration with technologies like 802.11 and voice over IP. “We also have some patents which give us better performance in terms of operating in a very low signal-to-noise ratio, which translates into better link budget, better coverage, and larger cell size,” he says.
In the David-versus-Goliath challenge of standing out against industry giants like Intel, Aboussouan says he’s been pleasantly surprised by the ease with which Sequans has attracted both customers and funding. “People realize the value that we bring—the fact that the team has a lot of know-how, understands communications, and understands systems,” he says.
The larger challenge lies in convincing potential customers that they can count on Sequans to be around five or ten years down the road. “Obviously, we have to provide some level of guarantee that if the company disappears, you could have access to the chips from other sources or directly from the foundry,” Aboussouan says.
Aboussouan says Sequans’ current revenues are coming from evaluation kits and FPGAs, with further revenue from 802.16-2004 chips and software licensing expected in the second half of the year. “We expect a few million in revenue in 2005, and then break-even in 2007,” he says. “And if 802.16e is as successful as it could be, then we see revenue scaling up to $50 million in 2009 and $150 million in 2010. Obviously, that’s going to depend on how well that technology is positioned against HSDPA
One positive sign that Aboussouan sees in the marketplace is the fact that operators are looking at offloading high bandwidth users from 3G networks onto WiMax, and infrastructure suppliers are looking at enabling that option by providing dual-mode 3G/WiMax base stations. Still, outside Korea, he says, most people are guarded.
“They’re interested, and they believe in the benefit of WiMax versus 3G, but they haven’t yet said, ‘Yes, we are going to deploy a WiMax network at large,'” he says. “They’re moving cautiously into this field, and the initial success or failure of WiMax is going to be a good indication of what the future holds.”