Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry. In the coming weeks look for columns from Current Analysis’ Peter Jarich, IDC’s Shiv K. Bakhshi, Ph.D., and Enderle Group’s Rob Enderle.
The creation of Clearwire as a new mobile WiMAX carrier was the most visible result of the recent blockbuster agreement between Clearwire, Sprint and five other companies investing $3.2 billion in the future of the wireless technology — Intel Corp., Google Inc., Comcast Corp., Time Warner Cable and Bright House Networks. For Sprint, though, the agreement with Clearwire resolves the on-again-off-again partnership between this large CDMA carrier and the smaller WiMAX provider, as it provides a source of much-needed WiMAX funding and resurrects the cable joint venture that had previously fizzled with Pivot.
The Clearwire announcement comes as U.S. consumers are adopting more 3G mobile handsets and as companies are experimenting with connected consumer electronics. According to NPD’s Mobile Phone Track, 3G handsets accounted for 33% of sales in 2007, a big leap from the 16% sold in 2006, while recent introductions like the Samsung Instinct at Sprint, LG Vu at AT&T, and Samsung Glyde at Verizon Wireless are furthering large-screen form factors.
Meanwhile, cellular-enabled Dash Express and Amazon Kindle are at the forefront of a new wave of connected consumer electronics, but even more mainstream products are building in support for WiMAX’s cousin: Wi-Fi. Buoyed by the iPod touch, Wi-Fi-enabled MP3 players accounted for 15% of the market in the first quarter of 2008, compared with just 3% of the market in the first quarter of 2007. With this kind of growth, it’s easy to see the benefits offered by enabling widespread untethered access to these types of devices.
WiMAX now has a corporate home where it can be the focus rather than a distraction to a carrier trying to right its predominantly voice-driven business. Reciprocal agreements will allow Sprint and Clearwire to resell the others’ 3G and 4G services, however, and the companies will offer preferred-rate access on infrastructure. Sprint’s enterprise sales force will also resell Clearwire WiMAX services. In short, Sprint and Clearwire will be joined at the hip — as well as several other junctures.
The net neutrality question
With national WIMAX voice services still years away, cable companies that have long supported closed networks will (again) be able to tap into Sprint’s 3G offerings. These cable companies are among the ISPs that would like to end net neutrality. This situation might seem antithetical to Google’s best interests, since the company relies on open networks to ensure that distribution deals aren’t a necessity; however, as an investor in the new Clearwire initiative, Google is listed as the exclusive Web and local search provider. In the “open Internet” model that WiMAX promised, net neutrality apparently isn’t so important, at least when its absence is a net positive for Google.
The near-term opportunity for WiMAX beats alternative technologies when it comes to the price-performance of wireless broadband for notebook PCs. In this initiative the support of the last major partner, Intel, will be critical in convincing high-volume notebook manufacturers to prime the pump for WiMAX. If customers follow suit, it will set off a virtuous cycle for WiMAX, which is required if Clearwire is to become the clear leader.
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