A month ago I put up a brief post on a company called xG Technology, which generated rather more entertainment and vitriolic comments than I'd anticipated. It's funny how I can regularly criticise UMA technology or metro-WiFi & still have cordial relationships with Kineto and assorted WiFi mesh vendors and hotspot providers (and their investors), but a relatively off-the-cuff post (which wasn't even that negative by my standards) could generate a call for me to be "strung up".
Since then, I've had few interesting emails and conversations about xMax. Last night I also had a blog comment added to an old post of mine, referring to a rather searing critique of xMax and one of its underlying patents, from a guy called Phil Karn who works for Qualcomm and who seems to enjoy taking shots at things that seem "too good to be true" - from timeshare sales pitches, through to "free energy" machines. See www.ka9q.net/xmax.html and www.ka9q.net/tristate.html . I'd actually been told about these articles a week ago or so by a 3rd party from the investment community, but didn't have time to write up a full post or moderate the inevitable stream of comment spam I'm going to get.
Now Mr Karn's writing style is pretty abrasive about both xG and it's main technology guy Joe Bobier. I'm not a huge fan of attacking people rather than organisations, but nevertheless, it's an interesting read. I don't know enough about either the finer details of RF modulation or information theory to critique his critique, but nothing jumps out at me as being obviously wrong - as far as I can see there's no major public debate about things like Shannon-Hartley theorem, for example. On the other hand, he does work for Qualcomm and his ka9q site is also accessible directly via http://people.qualcomm.com/karn so there will understandably be people who'll shout "but he would say that, wouldn't he? Qualcomm's scared" so caveat lector.
Anyway, it's an interesting diversion while the world waits with baited breath to hear what Telefonica Mexico makes of xG's products in its ongoing trial. Some observers think this might happen soon, but I can't imagine any service provider making snap judgements, in just a couple of months, about a strategic technology shift without exhaustive & lengthy large-scale trials. On the other hand as it's billed as a "joint venture" rather than a conventional supplier relationship, it could be that Telefonica is just providing cell sites, masts or backhaul infrastructure as its part of the deal, perhaps letting xG bear more of the financial risks about the radio side and sales/marketing of devices and retail services. Given the early stage of the technology, I could envisage some sort of vendor-financing arrangement being more palatable to CFOs.
I've also spoken to the CTO of another operator who's skeptical but keeping an open mind and watching brief on xMax "If it's true, then I can't afford to ignore it", although he's wary of the way the technology is being marketed and is also working on WiMAX in any case. No additional news from pioneering xMax customer, Florida ISP Far Reach on their ongoing deployment, either.
My view remains that there's possibly "something" interesting in xMax, but not magically wonderful. There remain doubts as to its real-world efficacy, as Karn's comments illustrate - it's certainly not as cut-and-dried "proven to work" as its advocates suggest. However, I still maintain that trying to do a wVoIP service as the first application is a serious mistake, as the difficult things about wVoIP are not the wireless bits, but the VoIP bits (codecs, servers, interconnect, quality, testing....), as well as all the other messy parts of the end-to-end solution. A more general data access service (eg cards for laptops, or fixed wireless modems) would make much more sense.
Now, some housekeeping notes:
I'm expecting some hatemail on this, just for giving Karn's views an airing. I guess my old friend Mr Anonymous, who so graciously dispensed his wisdom on my last post, may return. I suspect he is one of the regular bullish posters on this board, who have also been shooting at Karn's analysis and who specialise in burning heretics, rather than engaging in debate. I think my erstwhile interlocutor is quite possibly the one with the handle "marcsanpedro", as the syntax & language & style of multiple consecutive posts is similar, plus he refers to me in one instance. If so, I can quite understand why he doesn't like Google as a research tool. And if he's who I think he is, he also randomly phoned me last year asking my opinion about xG.
Anyway, I've got a busy week ahead, so I'm going to be ruthless with deleting comments from the more rabid xG fans that are offensive rather than factual, as I don't have time to debate endlessly. It also looks like Blogger now has a "lock comment thread" facility for individual posts, although I hope I won't have to use it.
Dean Bubley's Disruptive Wireless: Thought-leading wireless industry analysis
10 comments:
The 'Annonymous' comment poster is particularly amusing, he's popped up all over with anything connecting to XT and was fairly outspoken on the subject of the AIM market over at Techdirt, where he claims to have been making vast amounts of cash. Combined with the slightly Italian American style of swearing he uses and his general policy of attack/swear/make inane comments rather than contributing a modicum of understanding or debate, maybe he's a friend of Tony Soprano who likes a bit of share pumping and dumping? Or perhaps he'd just like people to think he was... it's a stark lesson that money won't make you happy though, if all he can do with his millions is hang around and swear at people in blog comments.
Wow, this just never goes away. I've been doing wireless systems design since about 1993 and currently work for a WiMAX equipment vendor (most certainly NOT Qualcomm). Every few years, this technology pops up. I've had to field panicky calls from our CEO about the competitive threat of xG. In its earliest incarnation, there was something called VMSK, which made extraordinary claims similar to those of xG. Back then, I was working at the Communications Research Center, a Canadian gov't research lab, and we were all quite bemused by the concept. We all agreed it was bogus. Thankfully, Phil Karn went through the effort of a proper debunking. Since then, the concept keeps popping up like the undead in a zombie movie.
The latest incarnation is xG and it's just as bogus as its predecessors. The only difference is that this time, they've committed a swindle of Enron-esque proportions. I don't use the term "swindle" lightly and I'm frankly astounded that they managed to pull in that much money into their enterprise.
The basic problem with wireless is that it is a deeply complex technology and thus vulnerable to snake oil salesman. The theoretical concepts are difficult for even engineers to grasp so it's very difficult for non specialists to asses the various arguments. Phil Karn is very knowledgeable. For disclosure, I met and worked with him very briefly about 10 years ago though he almost certainly doesn't remember me.
I doubt that this will convince the true believers but it's my strong belief that we are witnessing a financial fraud of huge proportions. We shall see.
Dean, Hi, I didn´t know why you needed to know who I am...here is a perfect example of why I post in the style I do. Let´s take this comment above mine, he is calling the company a fraud without any responsibility at all for his actions, should they be unfounded. That´s why I can call him a loony tune and hope that someone can slap him in the face to wake him up....Dean, what do you do in this case...what can you expect me to do. Do you want me to get into a debate regarding xG while having to defend it against comments like this asshole makes in a seeming untouchable way. Again with the VMSK, we´ve been hearing about that crap for years, while in the meantime, xG has signed deals, gone public and is now worth close to 2 Billion Dollars. Are you trying to tell me all those involved with all the things xG has been involved with since the demo know less than you, or worse off, are part of some huge scam??
This is why I feel how I do about blogs and if a complete idiot like the anonymous jagoff can blog what he blogged, there is not much I can be held accountable for as well.
Does that make some sense?
I never meant to feed the trolls I was just genuinely intrigued by the whole XMax/XG proposition. Anyhow, the questions I have about the company are less technical and more strategic. If one compares them to Flarion, who I would imagine to be closest company in terms of offering of the past few years, the price difference doesn’t seem to make sense:
Major Customer Announcements
Flarion - Vodafone Group (Trial), T-Mobile Slovakia (Commercial Network), OCTO Washington DC (Commercial Network), Citizens Wireless (Commercial Network), Cellular One of Armarillo (Commercial Network), Nextel (Commercial Trial), Digita Oy (Commercial Network)
XG Technology - Telefonica Mexico (Trial), Far Reach (Commercial Trial)
Major OEM Partnerships
Flarion – Siemens, NETGEAR, Motorola, Northrup Gruman
XG Technology – None publicly announced
Price
Flarion – $600million
XG Technology - $1.8billion
Knowing how these things go it could well be the case that XG has a raft of partners on board but that none of them are yet ready to go public and I fully acknowledge that this is not uncommon in Infrastructure circles. However, even if this is the case are they really worth 3 Flarions?
OK, this is a bit more civil than last time. Thanks.
Mr Anonymous - in my mind there is a big difference between criticising a company and an individual. Your (I assume you're the same original poster) previous comments were largely directed at me, and were both offensive & inaccurate. It's natural to want to know the source.
My view is that anonymous comments on blogs or other forums are doubled-edged swords. I'd prefer all comments to be attributable, but then I'd miss out on some valuable contributions. Also, anyone thinking they have access to true & perpetual anonymity while online is naive. We all leave digital footprints.
For that reason, I am uneasy with legally-meaningful terms like "fraudulent" being thrown around.
Also, the other poster's comment here about "pulling in money" seems to confuse valuation with fund-raising. Although xG is valued at $1.7bn, it has only raised a fraction of that as cash. Also, the shares are so tightly-held that I'd expect any attempt to sell a large amount would drive the price down rapidly.
I'd also agree with Thelf that xG hasn't clearly pulled in fully-commercial "deals" in the generally-accepted sense of selling boxes for cold hard cash. In particular, the financing of the Far Reach contract is opaque at this stage. Telefonica Mexico sounds like a preliminary trial - the "joint venture" wording is unusual and also implies that Telefonica isn't paying outright for it either.
The comparison with Flarion is an interesting one - I knew the company for several years prior to the Qualcomm acquisition and it had great technology, but was hampered by the difficulty of creating a full ecosystem around a proprietary platform.
The Far Reach deal is far from opaque, Dean...it clearly states 57 million USD for around 1140 base stations. You can find that by doing a Google Search. Dean, you can also find in the latest comments by xG that they have attained commercial revenue. I know a bit more about how their deal with Far Reach is not opaque.
Trying to figure out why you feel it is opaque. Was it just an opportunity to use the word "opaque", because I can understand that. Your inference that xG will not get a good deal with Telefonica is strange as well. Why would you assume xG wouldn´t get a good deal?
Opaque means unclear. It's not obvious to me, for example, whether the backers of Far Reach also have any involvement (or investment) in xG itself. On the face of it, Far Reach doesn't appear to be the type of company I'd expect to deploy radical new radio networks - its background is as a web hosting company, rather than a major facilities-based ISP. Why fund a company without (it seems) wireless infrastructure engineers to the tune of $Lots when the backers could presumably have found someone else with a "head start"? I'm wondering whether there's some sort of vendor financing or other "related party transaction" involved.
The reference to $57m / 1140 sites seems to come from the Hichens report:
"At the time of the IPO the company had received binding commitments to purchase base stations to cover an estimated 57m members of the US population. Companies interested in reserving a market as an xG dealer commit to paying a dollar a head of population within the territory. This pre-payment is then credited against purchase of base stations. At $57m, sales of 1140 base stations are implied. We assume considerably lower numbers."
http://www.eelveltcomputers.nl/xG%20Technology%20report.pdf
So are you saying that the 57m committments were ONLY from Far Reach? Also, the phrasing in the Hichens report says 1140 sales are "implied". It's also unclear if there are conditions on this "binding" committment, eg any contingency based on the results of deployment of the first 5 base stations in Florida. It's also unclear whether Far Reach has the $57m in the bank already, or whether its backers could pull the plug at any point despite Far Reach's "committments".
With Telefonica Mexico I'm not saying xG "will get a bad deal", just that the announcement seems to be worded in a way to suggest that (a) it's all at a very early stage, and (b) it's also not a straightforward equipment purchase but a more complex arrangement.
"exclusive territory trial agreement" - this is pretty unusual, although I agree it fits with xG's stated strategy of exclusivity. Not sure why they don't want to sell to everyone, rather than creating local monopolies, though. Unless maybe running multiple competing xMax networks in the same place risks interference, I guess.
"allow Telefonica Mexico to evaluate and test the xG technology for a potential joint venture to build a network providing xG transmission technologies". Because it mentions joint venture, that again suggests that xG will itself partly-fund the network build out & operation. Why don't Telefonica want to buy & own the network outright if they like the technology? The use of the word "transmission" is unusual too, as in wireless networks that usually means backhaul, rather than the actual radio connection to end users.
Dean thanks but I´m "clear" on the meaning of "opaque". Anyway, we will all see very soon who is right to doubt xG´s claims and who will walk away with some fresh egg on their face
Rambus pulled this same sort of stunt in the memory industry. In this case it should be fairly benign. Rambus had two advantages. First, Intel management drank the Koolaid (and forced their engineers to implement it), and second, the US patent office let them run a torpedo scheme anyway.
xG has neither of these and should be fairly benign. The people who lose money in it would have lost money in some other get rich quick scheme.
LOL, Poster anon of the 9th comment. What can we expect from you come Monday Afternoon? What type of Get Rich quick scheme lasts 9 years? Dean, don´t you have a way of testing these idiots for brain function?
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