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LTE breathes new life to WiMAX startup

Posted: 18 Dec 2014 ?? ?Print Version ?Bookmark and Share

Keywords:Sequans? WiMax? LTE? startup? HTC?

Startups essentially arrive at three probable endings: They make it big and thrive as a successful company, they sell out, or they flop. Sequans' story is quite unique in a sense that from being a startup, it was able to surpass a challenge that could already have made any company surrender to failure. However, Sequans is a perfect example of a well-managed company that have stood strong above even the most serious obstacles.

Early one Paris morning in July 2011, Georges Karam, president and CEO of Sequans Communications, got a call from HTC, a mobile handset vendor from Taiwan and Karam's biggest customer. The caller asked Karam to stop shipping Sequans' WiMax radio chips, which had been designed into HTC's then very popular EVO phones supplied to Sprint in the US.

The reason for this catastrophic cancellation wasn't immediately clear to Karam. But later in the morning he learned that Sprint, the only major U.S. cellular carrier with no iPhone offerings, had decided to drop HTC and go with Apple. Sprint's sudden change of heart made obsolete HTC's two new mobile phones, scheduled for the fall of 2011 and early 2012. As HTC's chip supplier, Sequans, too, was instantly obsolete.

Georges Karam, Sequans CEO

Sequans, which went public on the New York Stock Exchange earlier that year, had to go back to a very old drawing board. "We became a new startup all over again, with no product and no market," Karam stated.

The contrast was devastating. Before the call, Karam was thinking that his company was "out of the tunnel," with revenue in an upward trajectory. The company was forecast to make $35 million in Q3.

Instead, Sequans missed that revenue target, bringing in only $25 million and diving spectacularly to $8 million in Q4.

While the story of Sequans' near death experience is hardly over, it's worth chronicling Karam's efforts to keep the team, look for its place on the market, and eventually re-invent the company's identity.

Sequans revenues from 2009 to today

Sequans revenues from 2009 to today. (Unit: $ millions)

Shift from WiMAX to LTE CAT 0

Sequans today, which began its life by making WiMAX radio chips, is squarely focused on the LTE-only single modem chip market.

Sequans chose to play in a much smaller segment of LTE market by supplying single-mode LTE-only modem chips to data devices such as home routers, portable routers and tablets. Unlike LTE smartphones whose voice functions need to fall back on 2G and 3G when there's no LTE coverage, LTE data devices don't necessarily come with that requirement.

Karam openly acknowledges that Sequans, too, looked to acquire 2G and 3G modem technologies and add them to its LTE modem solution, in hopes of getting into the smartphone market. However, serendipity prevented Sequans from stepping into the snakepit of multi-mode LTE. Other companies such as Broadcom, Renesas Mobile and ST-Ericsson all believed they could fight the big boys in the multi-mode LTE smartphone market, but they ended up eaten alive by Qualcomm and forced to abandon the modem business altogether.

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