Cisco Delivers WiMax Wake-Up Call With Clearwire Deal; More Markets, More Opportunity?

After Cisco bought WiMax radio supplier Navini in October 2007, industry watchers waited and wondered why the biggest networking vendor wasn't doing more with WiMax in the U.S. market.

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Now after the announcement last month of a multi-year deal between Cisco and Clearwire, the waiting is over - and you have to think Cisco just delivered a big wake-up call about WiMax to Silicon Valley and Wall Street in one big move.

What really made the deal big news was the inclusion of Cisco's pledge to ship a mobile WiMax end-user device before year's end. The other part of the deal, which involves Clearwire using Cisco gear in its core IP network, isn't so surprising -- in any IP network of Clearwire's size, you might be more surprised not to find Cisco gear in the wiring closets.

But by pledging to develop end-user devices, Cisco is signaling to the rest of the industry (and investors, if they are listening) that WiMax is more than a curiousity. Cisco CEO John Chambers is famous for not wanting to get into new businesses until they offer Cisco significantly large opportunities, usually in the billion-dollar range. Is WiMax the next billion-dollar business for Cisco? Thanks to the May 13 deal, that question is now more than hypothetical.

And now, with more Clearwire markets coming on line, Cisco's planned device may have a lot more potential users. As Clearwire officially launches its Atlanta market June 16, the company is in the midst of some aggressive pricing promotions, including a new unlimited-use home and mobile package for $55 per month. The new prices, Clearwire said, will be available in all its "live" markets, which include Portland, Atlanta and Las Vegas (which will "officially" launch later this summer even though services are being sold already).

In a recent call following up on the company's first-quarter earnings announcement, Clearwire chief strategy officer Scott Richardson said that some better-than-expected network performance was partially behind the idea of the new "bundled" pricing plans.

The "Pick 2" unlimited plan promotions, for example, allow either a mobile and home connection -- or two mobile connections -- for just $55 a month (regular price $80/month), with download speeds of 6 Mbps. Such plans might be interesting to users who want to deploy Clearwire's Clear Spot Wi-Fi/WiMax router, a $139.99 device that lets up to eight different Wi-Fi connections piggyback off a WiMax service plan. The "unlimited" part of the plan, Richardson said, is the part that other wireless data providers might have a hard time matching.

"Our friends in the 3G space [with similar products] are already limiting application use," Richardson said. "Providing open access is the strategy that's really important to us. I don't think that's the kind of thing the cellular guys can really support."




PAUL KAPUSTKA is the editor and founder of SIDECUT REPORTS, which recently released its "Clearwire NTK" research report (which stands for Clearwire -- Need To Know), priced at just $4.95. You can order the report directly by following this link.






 

Tuesday, June 16, 2009 in Business  | Permalink |  Comments (2)