Sprint-Clearwire Joint Venture "Very Positive News" for WiMAX, Says ABI Research
Portable Design News, Wednesday May 07, 2008
Today Sprint and Clearwire announced a new joint venture to build an advanced mobile network. Based on WiMAX technology, the new network will bear the Clearwire name, but the $12 billion value of the new company includes $3.2 billion from partners Google, Intel, and three cable companies, Comcast, Time Warner and Bright House.
"This is very positive news for WiMAX globally," comments ABI Research principal analyst Philip Solis. "WiMAX has been moving forward in developing countries. But in the industrialized nations, the industry was waiting for Sprint to get the ball rolling, lifting volumes and driving down ASPs. Sprint chose WiMAX in 2006: it had the vision, and it pulled together an ecosystem of chipset and equipment companies. But there was one missing piece: money. They needed financing and the confidence of the investor community. The formation of this joint venture completes the picture."
"What's particularly interesting is the participation of the cable companies," Solis continues. "Competing against telcos that have moved into their video markets, they have long wanted wireless in their portfolios. Now they are part-owners of a mobile wireless network."
However, the cable companies still need a mobile voice solution which will not be immediately resolved by deploying a WiMAX network, since VoIP is planned for future upgrades.
Senior analyst Nadine Manjaro adds that, "This announcement provides the kick-start that WiMAX needed. Since Sprint was the company driving WiMAX so hard, a waiting world was getting disappointed that it hadn't really done anything with it yet. Verizon recently announced its plans to deploy LTE in 2010, and since WiMAX was said to enjoy a two year time-to-market lead, everybody was waiting for Sprint to solidify that advantage. With this announcement, Sprint can claim that it is doing so."
"Clearwire will be taking a lead operational role and the new joint venture will be under its name," she says. "Sprint has to a degree suffered from a perceived deficit in customer service. This way, Sprint has some ownership without that baggage."
Other winners from this announcement are the WiMAX chipset makers, and Samsung, Nokia and Motorola, the three vendors selected to provide infrastructure for the new WiMAX network. However, the challenge will be how each party in the joint venture deals with issues such as the cannibalization of some of their existing products.
ABI Research also believes that there is a potential downside for Sprint: it does dilute the company's control and ownership of the network that it considers to be its future. Telecom joint ventures (especially those with multiple parties) have a very poor track record, and this strategy is not without significant risks.
ABI Research, Oyster Bay, NY (516) 624-2500 [www.abiresearch.com]
