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Intel invests in WiMax again amid doubts

Intel has invested in a mobile broadband startup as part of what has become a long, hard slog to get WiMax into the mainstream.

Update on September 4 at 10:00 a.m. with correction about Aicent. See also statement clarifying Aicent's business strategy at bottom.

Intel's investment arm has put another chunk of change into WiMax, a wireless technology that has not lived up to its billing as the successor to Wi-Fi.

This time Intel Capital has sunk $3 million into Aicent with the hope of accelerating the wireless technology's adoption.

Intel will push WiMax in its laptops and mobile Internet devices
Intel will push WiMax in its laptops and mobile Internet devices Intel

Aicent provides data network, messaging, and roaming solutions for GSM and CDMA mobile operators and operates one of the world's first and largest multimedia messaging exchanges, according to an Aicent statement.

In an interview, Ranjeet Alexis, senior director at Intel Capital, said that Aicent excels in "roaming exchange" technology--"Where different carriers can connect to other carriers," according to Alexis.

"They create this hub and different carriers can connect to the hub. If a carrier, let's say, in Africa or Latin America or India, wants to connect into China Mobile, they don't have to directly go to China Mobile," Alexis said. "They can connect to the hub, which, in turn, connects to China Mobile."

Alexis said that WiMax operators could access this hub and connect across different carriers running different wireless technologies.

An interesting concept, except WiMax is still trying to find a foothold after being launched back in 2001 by the WiMax Forum. Not that money has been an obstacle. Intel is a major backer of WiMax along with Nokia and Motorola. The world's largest chipmaker has invested $600 million in Clearwire. That investment is part of $900 million in joint financing of Clearwire with Motorola.

Sprint Nextel and Clearwire, in turn, have allocated $5 billion for a WiMax build-out by 2010, and Intel CEO Paul Otellini has proclaimed that 750 million people will be covered by WiMax in 2010 and 1.3 billion by 2012. WiMax is like Wi-Fi, but offers much broader coverage.

Gartner analyst Ken Dulaney, however, is not keen on WiMax's chances. Dulaney says it has potential in developing countries where there is little wired infrastructure. "There, it makes a lot of sense," he said. But less so in developed countries, where, as a pure mobile technology, it is problematic.

"It's semi-mobile, which means you pretty much have to stay in one place while you're using (WiMax)," Dulaney said. "There were supposed to be mobile phones out from Motorola and Samsung but those haven't appeared."

"So, we would say WiMax, as a (pure) mobile technology, has underperformed and doesn't have much potential there." And WiMax will have trouble going head-to-head with cell phone giants like Verizon, he said. "It's going to pale in comparison to Verizon who's committed to LTE. AT&T and T-Mobile all are also committed to LTE." (LTE stands for Long-Term Evolution.)

"That leaves Sprint as sort of a wireless orphan," Dulaney said, referring to the fact that Sprint is stuck with WiMax.

"Most likely what you're going to see is that Intel is going to throw a lot of money at getting laptop manufacturers to put WiMax into their laptops," he said, with the hope that users will select WiMax over Wi-Fi.

Intel also has plans to push WiMax for its handheld mobile Internet devices.

(Correction: Aicent is not a startup. It was founded in 2000 and its services cover 1 billion subscribers.)

(Correction: Aicent states that it's technology-agnostic. The company made the following statement: In as much as Intel is betting on WiMax, Aicent is betting that technology evolves and Aicent needs to be ready to support all the technologies employed by carriers around the world. Yes, Aicent has a WiMax initiative, but the company's 4G plans include LTE and UMB as well. And Aicent's services are global in nature so if WiMax becomes the popular choice in Africa, there will be a need for their services between African carriers, and between African carriers and carriers around the world - potentially for interstandard roaming.)