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According to a research note from San Francisco-based analysts at ThinkPanmure, ip.access beat Motorola, Alcatel-Lucent/Sagem, Nokia Siemens, Airvana and 2Wire to the AT&T contract for 7m units, which has not been officially announced but follows a lengthy evaluation by the US cellco that has proved most enthusiastic about femtocells. Sprint Nextel has actually got to market first, with its launch of the Samsung Airave in limited markets, and recently Verizon Wireless expressed its interest, particularly when it starts to move to LTE from 2009, while TMobile USA remains primarily focused on its Wi-Fi convergence strategy, Hotspot@Home. According to the research note, the five-year AT&T deal calls for ip.access eventually to price its Oyster3G units at less than $100 each, the magic number initially thrown onto the public table by Vodafone CEO Arun Sarin last year. Such a tag will be essential to make a femtocell convergence/ coverage strategy price competitive, especially for US operators, with the Wi-Fi/dual-mode handset approach favoured by T-Mobile.

As in Wi-Fi access points, there is likely to be a shake-out among the start-ups as the femtocell market matures and heads for volume and for the $100 price tags the operators are asking for. As in Wi- Fi, and other networking markets, we might just see one pioneer surviving as an independent, and will almost certainly see one bought by Cisco (in the light of the AT&T news, highly likely to be ip.access) and one or more by other majors. However, the big cellco suppliers remain ambivalent about femtocells - a $100 miniature base station, even sold in quantities of multiple millions, is highly threatening to the business assumptions of Ericsson, which remains understandably cagey, even head-in-the-sand, about the femto craze.

Most of the mobile infrastructure vendors are working with partners in order not to be excluded from operator deals, but may see little reason to acquire an operation of their own, since it could be difficult to integrate into their existing structures and would have a negative impact on overall corporate margins. For instance, Alcatel- Lucent is selling devices from Sagem, which for all its recent financial pressures certainly understands how to run a supply chain geared to mass market, low priced products rather than complex, high margin base stations. Nokia Siemens looks set to take this logic a step further, working with even more efficient deliverers of the price sensitive consumer gadget, the Taiwanese ODMs. According to reports from the island state, NSN is in talks major ODMs Gemtek Technology and Accton Technology for a femtocell venture to reduce the costs of delivering the tiny base stations. NSN has already spread its femtocell favors among several partners - Ubiquisys, directly and via its Netgear deal; Airvana; Thomson, which is also working with Airvana on gateways; and RadioFrame (the latter mainly for picocells). Now NSN is said to be looking to the Taiwanese companies to help it drive down femtocell prices to the operator from about $250 to under $100 in readiness for major contracts that are expected from later this year.

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