In the Mobile Phone Industry, Success Doesn't Skip a Generation
This summer mobile carriers and their technology partners will begin testing the next generation of mobile networks—also known as 5G.
While consumers probably won't see the results for another three or four years, the work going on now will help determine which companies cash in as the wireless Web moves beyond the smartphone and starts connecting everything from cars to light bulbs—the Internet of Things.
Companies are working feverishly to get new devices, services and components ready because they know from painful experience that leadership in one generation of technology is no guarantee of success in the next. Getting it right can mean billions of dollars in new revenue; getting it wrong can leave companies playing catch-up for years. Or dead.
The five following examples trace a history of missed opportunities.
In the late 1990s, Nokia and Ericsson developed the technological underpinnings of new digital phone networks and seemed poised to dominate the industry for years to come. But when South Korea rolled out the first commercial 3G service in 2002, it wasn't using Nokia-Ericsson gear but technology from an obscure chip maker called Qualcomm on phones sold by Samsung Electronics, then a relative minnow. By the time Apple's iPhone appeared in 2007, ushering in the smartphone era and mobile Web, Nokia had lost its technological edge to Qualcomm and Samsung.
Locked in a 3G arms race with AT&T, Verizon Communications announced in October 2010 it would build a 4G network using LTE technology to serve 38 major cities by year-end. Sprint had already chosen a different 4G technology called Wi-Max. By 2011, with Verizon already a year ahead, AT&T announced its own LTE plan. Sprint had no choice but to abandon Wi-Max and adopt LTE as its 4G technology.
Founded in 1951, Texas Instruments helped pioneer mobile technology by putting computer-like processors inside phones. It seemed as though TI had won the day. Then Qualcomm, an upstart founded in 1985, managed to persuade phone makers that its technology was better at transmitting data. Soon Qualcomm was outspending TI on research and development, inventing new chips that formed the basis of the smartphone revolution. TI is now a much smaller company.
Selling mobile phone equipment is lucrative, if you're making the right kind. Ericsson was the first equipment supplier out of the gate with commercially available LTE wireless gear in 2007. Rival Siemens—now part of Nokia—Huawei Technologies, Alcatel-Lucent and others soon followed. At the time, the wireless industry hadn't decided which upgrade path to follow and was still weighing the merits of LTE versus Wi-Max. Ericsson backed the right horse.