Terabeam snatches bankrupt Proxim

Terabeam Wireless has paid a mere US$28 million to acquire bankrupt wireless vendor Proxim. Terabeam emerged as the highest bidder in the court-approved auction held in connection with Proxim’s bankruptcy filing.

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By  Simon Duddy Published  August 21, 2005

|~|Chmilewsky,-Lion_m.jpg|~|“The buy-out is good news because Terabeam is financially strong, is in the same kind of business as Proxim and has largely complementary product lines.” - Lionel Chmilewsky, vice president of international sales at Terabeam Wireless.|~|Terabeam Wireless has paid a mere US$28 million to acquire bankrupt wireless vendor Proxim. Terabeam emerged as the highest bidder in the court-approved auction held in connection with Proxim’s bankruptcy filing. The acquisition allows Terabeam to take over Proxim’s assets and business and avoid dealing with its once substantial liabilities. The agreement supersedes Proxim’s earlier US$21 million pledge to sell its assets to Moseley Associates. “With the completion of our acquisition of Proxim, some of the most recognisable brands in our industry have joined forces,” says Robert Fitzgerald, CEO of Terabeam. “This is a quantum step to allow our customers to provide and enjoy ubiquitous broadband wireless connectivity,” he adds. Proxim was an early leader in Wi-Fi and other wireless technologies but insiders say the company diversified too far and paid the price. Former Proxim EMEA supremo Lionel Chmilewsky takes the helm of Terabeam’s regional operations with the title of vice president of international sales at Terabeam Wireless. “The buy-out is good news as Terabeam is financially strong, in the same kind of business and has largely complementary product lines,” he says. Chmilewsky is emphasising continuity, with Terabeam keen to maintain Proxim’s brand and international sales, marketing and technical apparatus. Terabeam Wireless will continue to sell the Proxim products that have proved strongest, such as the Orinoco and Tsunami lines. Chmilewsky believes that Proxim products will prove profitable for Terabeam as it is not hamstrung by the liabilities Proxim built up over the years. The deal is not all one way, with Chmilewsky enthusing about other opportunities brought by the deal, such as using the Proxim channel to sell Terabeam’s free space optics (FSO) products. While emphasising continuity, Terabeam Wireless has embarked on a campaign to rationalise product lines as a result of the takeover. Proxim and Terabeam product sets overlap in some areas, for example, both are involved in the nascent WiMax technology, although with divergent chipsets. Terabeam is developing technology with Fujitsu chips while Proxim has favoured Intel. It is likely that one of these lines will be shelved. The vendor expects little impact on customers, as core product lines, warranties and partners will remain, while the pace of product development is expected to increase. Similarly, Proxim’s existing partners in the region are happy with the move. “Our understanding is that Terabeam has made the acquisition to get hold of the Proxim brand, product lines and channel network and it will look to drive revenue, so we’re very positive about the move,” says Jitendra Kapoor, business development manager of security at OnLine Distribution. WiMax rising Worldwide WiMax equipment revenue hit US$16.4 million in 2004 and is projected to grow to US$124.5 million in 2005, according to Infonetics Research’s latest market outlook report, WiMax and Outdoor Mesh Equipment. The research firm says WiMax is initially being deployed as a wireless backhaul solution, but will be deployed as a mobility application starting in 2007-2008 once the 802.16e standard is ratified and WiMax-capable client devices are available, marking a ramp-up in the market. Outdoor mesh network access nodes also represents a small but rapidly growing wireless segment, totaling US$8.8 million in 2004 and growing to US$110.4 million this year.||**||

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