Feature Article

January 29, 2009

Recessions Hurt

Recessions hurt.
We’ve previously noted that decision-makers at many of the technology industry’s leading corporations seem to have a lot of faith in WIMAX, specifically in Clearwire’s United States venture. The catch is that the market does not share their optimism.
Intel’s losses after acquiring Clearwire now total $1.1 billion to $1.2 billion — significantly more than the previous estimate of $50 million. Meanwhile, Nokia is pulling the plug on WiMAX-enabled mobile devices designed specifically to work with Clearwire’s networks. At present, it’s a sensible strategy for Nokia, because mass sales of WiMAX products cannot become a reality until Clearwire manages to roll out its offerings to a greater number of markets. But this could be a case of a double bind. Manufacturers like Nokia depend on the success of Clearwire before they can profit from WiMAX-equipped mobile devices, but Clearwire will have a harder time attracting customers in the absence of those devices. To borrow an old cliché, WiMAX technology seems to be taking one step forward and two steps back — at least for the time being.
But how likely is it that this currently sticky situation will kill off WiMAX development in the United States, as some have suggested? The survival of WiMAX depends, like all new ventures, on the future health of the economy, and it is difficult to predict how much longer it will take for the skies to clear. But ultimately, metropolitan WiMAX is still a good idea. There are even indications from Clearwire — at the moment, a mighty burden on the shoulders of Intel — that its offerings will eventually flourish. “Clear,” the company’s 4G WiMAX broadband service, will launch in Portland this year. Of course there will be no fancy Nokia tablets on the market to woo Oregonians with a variety of mobile options — though Intel Centrino 2 notebooks with embedded WiMAX will be out within the year — but residential users can still lease 4G modems from Motorola for a whopping $4.99 a month, or buy mobile USB modems at $49.99 each. Basic access to the 4G network then costs $20 to $30 a month. (Prices increase with greater usage.) That’s cheaper than most basic mobile plans by major cellular service providers, and comparable to the cost of residential high-speed Internet access. With analysts predicting that Clearwire will reach nine markets in total in 2009, and with low-to-average pricing for cash-conscious end users, WiMAX technology could soon break out of its current doldrums. As VentureBeat blogger Andrew Ha points out, it’s just too soon after the final merger approval to write off Clearwire’s efforts entirely.
Recessions hurt. But sometimes, an economic downturn can be the best time to launch a business. Clearwire has the ability to use this climate to its advantage. It’s a tough time for companies invested in WiMAX, but predictions of doom and gloom are simply premature.

WiMax Pioneer Ari Zoldan is the founder and CEO of Quantum Networks, LLC, a service and product provider for the wireless industry specializing in WiMax technology. To read more of his columns, please visit his columnist page.

Edited by Greg Galitzine

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