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With Intel and Motorola's $900 million investment in Clearwire in July, hopes for WiMAX to become the next high-capacity, next-generation wireless technology juggernaut were high. But now analysts say the deal may only cause an initial ripple for the developing technology.
With the Clearwire cash infusion – $300 million from Motorola and $600 million from Intel – mobile WiMAX, which has been slowly working through standards and has no commercial equipment offerings, got a big, but not definitive, boost.
Intel's backing came at the expense of its mobile chip business, which it sold for $600 million in late June to Marvell Technology. Analysts say the deal with Clearwire signaled that the company is placing a heavy bet on WiMAX's success.
WiMAX advocates seem energized by the deal. "The investment announcement and transactions between Clearwire, Intel and Motorola are exciting for the broadband wireless industry," said Jeff Orr, marketing director for the WiMAX Forum in a statement sent to Wireless Week. "Network operators such as Clearwire continue to demonstrate their commitment to trial and deploy WiMAX technology, enabling new services and revenue streams using broadband wireless as their primary delivery mechanism."
Analysts, however, are more circumspect in their assessment of how the deal will impact emerging WiMAX as a rival for next-generation wireless networks and devices. They note the almost billion-dollar deal is probably only the next step on a much longer path for the technology.
"The deal makes sense," says Andy Fuertes, senior analyst at Visant Strategies. "It's a high-profile test bed for commercial mobile WiMAX technology and services."
"It's a big development in that WiMAX now has a service provider dedicated to it," says Tara Howard, WiMAX analyst at the Yankee Group. She adds, however, that it will be a few more years before actual mobile WiMAX equipment becomes available, noting that Motorola has a proprietary mobile WiMAX product, so it can offer a solution sooner than a standardized one. Howard adds that the business case for WiMAX services isn't convincing enough for big carriers to be very interested. There's no equipment or much of a network out there to base a business on, says Michael King, research director at Gartner Group.
The Clearwire deal doesn't mean WiMAX is set to become the pre-eminent next-generation wireless broadband technology – or cancel out other larger carriers' plans for EV-DO or other flavors of wireless broadband, says Fuertes. The deal does mark a significant milestone for the technology, however, as the high-profile, well-known players will lend some momentum.
"WiMAX is looking for people to commit," says King. At the same time, he says, it points out at least one weakness apparent in one of the players. Intel's sale of its mobile handset chipmaker and wholehearted jump into WiMAX equipment "is less of a gamble than going into handsets" initially, he says. Intel is in a stronger position selling WiMAX chips, he says, because the audience is largely the same computer-oriented suppliers that purchase its Centrino chips.
Fuertes points to an announcement that was quietly made by a coalition of several big wireless carriers a week or so before the Clearwire/Intel/Motorola deal was unveiled. He says it's evidence that larger, established carriers are moving with big, next-generation wireless plans that could overshadow WiMAX.
"The Next Generation Mobile Networks, or MGMN group, is a group of carriers – KPN Mobile, Orange, Sprint Nextel, T-Mobile and Vodafone – that have formed a group to protect themselves from the risk" of disruptive technologies, says Fuertes. The carriers banded together to make their own plans on how fourth-generation wireless broadband networks should be created, he notes.
The carriers' goal is "to provide a set of recommendations for the creation of networks suitable for the competitive delivery of mobile broadband services and cost-efficient eventual replacement of existing networks," according to an MGMN statement. "This initiative intends to complement and support the work within standardization bodies by providing a coherent view of what the operator community is going to require in the decade beyond 2010."
Despite a major score for emerging WiMAX technology, analysts say there is much more ground to cover before the technology catches on with big carriers for broadband applications. The apparent solidification of major carriers in the MGMN group points to that difficulty, says Fuertes. Howard agrees that big mainstream wireless carriers "don't have to push it" when it comes to WiMAX. They can stand to wait until the technology and business case is a little less new, she says.
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