Sprint Nextel will gain many advantages from spinning off its Xohm WiMAX unit - shared cost and risk with Clearwire, additional spectrum hoards and so on. But there are some downsides to the loss of full control too, and one of them is highlighted by the initial device roll-out strategy. Sprint will offer WiMAX-only products under the Xohm brand, which will be merged into the Clearwire joint venture around year end if all goes smoothly. But the market has been most excited about dual-mode CDMA/WiMAX gadgets, and these will appear soon, but only under Sprint's primary brand. This indicates the dilemma - how to position and market a mobile broadband service that is no longer entirely Sprint's, and could compete with, as well as stimulate, its CDMA services.
According to interviews between Sprint executives and online news service Unstrung, a dual-mode laptop card will be launched before year end, although possibly not in time for the initial commercial Xohm service in Baltimore, Maryland. Dual-mode handsets are expected around mid-2009. The laptop card will almost certainly be the most useful and desirable product for anyone wanting to use WiMAX on the road or in its truly mobile guise, as heavily championed by Sprint even as most of the world's deployment concentrate, for the time being at least, on portable and fixed access. So why will it not be closely associated with Xohm, as a means of attracting early adoption by the most valuable customer base for any portable broadband solution, the 'road warriors', who spend large sums on always-available access, often with corporate support.
Sprint says it wants to keep Xohm a WiMAX-only service. This is presumably mainly because of the brand and customer ownership complications for Clearwire if the joint venture was powered by devices that also made heavy use of Sprint's CDMA system. It also seems to reflect the almost messianic role that Sprint has adopted - or had thrust upon it by eager backers in the WiMAX community - in spreading the word of Mobile WiMAX as the first real 4G mobile technology.
Yet Sprint should be careful not to distance itself too far from Xohm, since it needs to convince its investors and customers that it has a credible migration strategy for the next generation after CDMA, and certainly needs to exploit its headstart, in this respect, on Verizon and AT&T. By, in effect, offering two WiMAX brands it may simplify customer relationships, but it is denying new customers, who may be drawn in by Xohm, the ability to roam on to CDMA, at least without a complicated switch to a 'real Sprint' product. Providing dual-mode access without explicitly promoting Xohm or Clearwire is fine for the existing CDMA base, and may help Sprint keep a greater share of their spend without having to split it with Clearwire (depending what the WiMAX network usage agreement turns out to be in the JV). But for new Xohm or 'new Clearwire' users, who do not need to appreciate any direct link to Sprint, there will be a serious restriction. Once outside the metro areas where Xohm is available, they will lose access, or will use Wi-Fi (since most early WiMAX devices will also have 802.11), and this will not generate much revenue, control or customer retention for Sprint or Clearwire.
Sprint may also be taking on itself a greater burden of subsidies for dual-mode devices as these emerge, and of supporting a wider than necessary range of CPE across its two activities. Early gadgets for Xohm will include the Nokia 810 internet tablet and laptop cards, with Intel's embedded WiMAX/Wi-Fi laptop chip due to appear in PCs next year.
The dual-mode opportunity is one keenly watched by chipmakers, especially Qualcomm, which is seeking many ways to broaden its church and prepare in advance for the gradual but highly probable future decline of CDMA. As CDMA carriers move towards '4G', Qualcomm will have a natural advantage in offering dual-mode CDMA chipsets with WiMAX or LTE, not just because of its dominance of the technology but also because it excels in highly integrated, low power, multi-radio platforms and is making great strides in software defined radios that will bridge multiple networks (with its Gobi PC 3G device an early attempt).
While Qualcomm has remained aloof from WiMAX, despite its claims to have IPR in the technology, the dual-mode market represented by Sprint/Clearwire is likely to draw it in, and its former COO Sanjay Jha, now head of Motorola Devices (also a natural to lead the CDMA/WiMAX sector) recently said the chip giant had been talking to Sprint, and that he saw the volume WiMAX market, at the device end, lying in dual-mode not standalone WiMAX.