DMR - is it the road to nowhere?

Pacific Wireless Communications Pty Ltd
By David Cox, operations director, Pacific Wireless Communications
Monday, 15 November, 2010

Just sometimes, the market experts can urge the market to follow an ideal which may just take a few over the cliff of reason.

Perhaps the biggest example is the ‘pied piper’ march to the DMR dream of digital utopia that apparently will instantly transform the radio market, satisfy everyone’s needs and ring the tills of the industry.

The theory seems to be that, over the next five years, most analog radio users will discard their current technology and take up the new digital standard known as DMR (digital mobile radio) and will be overcome with new features, messaging, multi-site trunking and the panacea of choice and price that will come with the open standard of Tier 3 DMR.

Market experts suggest that this will be low-cost, multi-vendor, non-proprietary and very profitable for radio manufacturers - perhaps.

Maybe I have missed something here but, the last time I looked at the market, TETRA has already achieved this brief quite a few years ago and now stands poised to aggressively push down with solution offerings that will reduce the DMR dream to a mere case study in poor market strategies.

Let’s put aside the glossy brochures and technical arguments and take a step back to explore some common-sense market realities that point to a different outlook and, perhaps, why DMR may be - the road to nowhere.

  1. Analog radio, simply, will not be switched off, which means that there is no compelling reason or ‘line in the sand’ for small- to medium-size LMR users to discard current systems and just embrace new technology. Narrowband analog radios comply with today’s spectrum regulatory requirements now and will into the distant future, ie, 10+ years;

  2. Sophisticated users who require advanced coverage; security and messaging capabilities already have low-risk digital technology choices with multi-vendor support and a competitive buying environment. P25 and TETRA solutions are entering the perfect phase of the marketing curve where sunk R&D costs have been recovered and significant scope exists to reposition, re-scale and push down hard into the migrating market at a moment’s notice.

    Perhaps, while they can, current P25 and TETRA manufacturers are waiting to see the whites of the DMR products’ eyes and watch the cash being splashed on R&D before they let loose with an incredible ambush of price, product and position to further expand their market segments, leaving little profitable opportunities for DMR.

    We are already seeing sub $700 P25 radios and sub $500 TETRA radios. It is realistic, with the global TETRA volumes, to see handset prices down to sub $400 in a short time - keep in mind and perspective that TETRA single customer bulk sales of 20,000 units are commonplace, ensuring that scope for sharp volume pricing is already available.

  3. Target DMR users are typically small/medium size fleets of 10 - 50 users. This base requires trained distribution channels and cealers to promote, sell and support, which subsequently requires reasonable margins for all concerned. DMR radio pricing will remain inflated to support these aging distribution models.

    Any manufacturer who scrambles to develop product will endure significant R&D costs to get to basic level DMR, without even achieving the vague promise of Tier 3 trunking. Marketed DMR trunked systems are currently awkward and some are even based on 70s style ‘mark/idle’ techniques (hardly mission critical and barely business essential).

    DMR early adopters will naively accept ‘orphan strains’ of trunking and multi-site solutions that will make it near impossible for other brand products to air-interface beyond local simplex mode. Users will be locked into hybrid solutions and forced to pay the price.

    Proprietary elements of DMR are entering the market at Tier 1 and 2 levels. We can only imagine the various features that will appear at Tier 3 trunked levels as manufacturers grapple to protect their DMR users. “When we said open standards, we didn’t actually mean open to competitors.”

  4. So where is the real currently unserved digital market opportunity for the land mobile sector? Perhaps another group of radio manufacturers may have read the market better through grassroots experience in this specific market segment by actually listening to their customers and also looking at spectral efficiencies for small fleet users.

    These manufacturers have adopted and delivering the NXDN dPMR 6.25 kHZ FDMA digital standard. Beyond NXDN we are sure to have scores of new dPMR radio manufacturers in Asia shortly about to redefine ‘value for the digital dollar’.

    From many perspectives, the dPMR solutions will meet the needs of this very large section of the market far better: with a simpler migration of analog features to digital technology and a sharper eye on the value/price criteria.

All digital solutions have their place and the winning formula is still to deliver more for less. The challenge, however, is knowing what is more and what is less in the buyer’s mind!

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