The wireless
revolution is here. The first phase was WiFi, the technology that allows sharing
of high speed Internet access without wires. WiFi has been successful at
creating wireless Internet access points at homes, businesses, cafes, and
college campuses. However, its speed and range is limited. Enter WiMax.
WiMax (Worldwide Interoperability for Microwave Access) represents the next
generation of high speed wireless Internet access. WiFi has a range of about 300
feet maximum and bandwidth that is limited by the speed of the Internet
connection (typically a cable modem line or DSL). WiMax provides a range of up
to 30 miles and voice or data transfer at speeds of up to 100 megabits per
second.
The benefits of WiMax over WiFi are significant and growing in number. WiMax
technology is likely to play a crucial role in providing last-mile connectivity
to consumers and businesses worldwide. WiMax appears highly suited for rural
areas or internationally where running laying fiber optic lines can be extremely
expensive.
Alvarion (Nasdaq: ALVR) is an Israel-based provider of wireless broadband
connectivity infrastructure products. The company supplies Point-to-Multi-Point
(PMP) Broadband Wireless Access (BWA) to telecom providers, service providers,
and enterprises, assisting these companies that build voice and data wireless
broadband businesses. The company is at the forefront of the next generation
wireless technology for high speed internet access for data transfer and voice
over internet protocol (VoIP).
The company provides a wide range of products for broadband wireless access.
Alvarion currently has 2 million units in over 100 deployments around the world.
WiMax deployments to date have been exclusively outside of the U.S., primarily
in developing nations in Africa, Latin America, and Asia.
Alvarion’s latest product to market is BreezeMax, the first fixed point WiMax
product to market, released in June 2004. Alvarion intends to use the
intellectual property and solutions of recently acquired interWAVE to add mobile
solutions to BreezeMax to allows for mobile WiMax. While the initial WiMax
deployments are fixed-point, meaning that a signal is broadcast from one point
to another, mobile WiMax should begin rolling out in 2006. Investment research
firm IRG Research estimates that mobile WiMax represents a potential $20 billion
market opportunity. International WiMax sales are expected to scale during the
second half of 2005, with U.S. sales coming online in mid-2006.
While Alvarion is leading the emerging WiMax technology trend, the company is
hardly a start-up with limited operating experience. The company has grown to
where it is today through continued sales growth, from $89 million in 2002 to
$127 million in 2003 and most recently $201 million in 2004.
Alvarion is a clear leader in the WiMax space, a market we expect to experience
rapid growth in the coming years. The company has a 70% market share of WiMax
deployments to date, and has extensive experience deploying networks
internationally for its clients, which include some of the largest international
telecom companies.
We believe that shares of Alvarion represent an outstanding play on the WiMax
space, and also represents a bargain at current prices, as it is slightly off a
52-week low. While WiMax will not happen tomorrow here in the U.S.,
international rollouts indicate that it is only a matter of time. As such,
investors in search of the next big thing should keep their eyes on Alvarion as
WiMax continues to revolutionize the next frontier of internet access.
