Intel Raises Stakes on WiMAX Race

Skylight Research - Point of View

Still soaking our feet from last week's WCA trade show and recovering from e-mail overload, we discover one very interesting read: Clearwire has scrapped (or at least delayed) its IPO in favor of a cool $600 million from Intel Capital and a sweet offer from Motorola to absorb NextNet into its 802.16e portfolio. 

This event accomplished a couple of things: a strong horse to haul WiMAX equipment and WiMAX proliferation in North America.  With NextNet on board, Motorola combines a strong portfolio for unlicensed bands and a growing global presence with a growing equipment supplier for licensed bands.  The deal is mutually beneficial as it gives Motorola an immediate foot in the door with licensed equipment and a customer who has the potential to change the competitive landscape of North American operators.  It gives NextNet a larger channel, more global recognition, and a well-known name. 

In tandem, this deal drives WiMAX into a new category.  It's no coincidence that prior to this transaction, Motorola was already a leading, maybe the leading, WiMAX contender in Sprint's evaluation of technologies for the 2.5 GHz band.  If Sprint chooses Motorola's .16e equipment, Clearwire benefits from roaming privileges without interoperability issues (which might be a reason for Sprint to make that selection as well). 

There are two questions on everyone's minds.  Is this an Intel strategy to provide an insurance policy for WiMAX because Sprint is favoring another mobile technology?  Or is this a clever tactic to influence Sprint's decision toward WiMAX in the interest of nation-wide roaming?  After all, interoperability, even in the earliest stages of equipment, will not be an issue if one vendor is supplying two large operators owning 2.5 GHz spectrum.

The transaction is not set to be complete until 2007, and since .16e equipment is not expected to ship until the end of 2006, the near term impact will be minimal.  Just the same, when Intel invests over a half a billion dollars - the same amount Qualcomm paid for Flarion - it makes a statement. 

Just in case anyone thought WiMAX may not be a serious contender in developed markets, let's let Intel remind us how serious they are - 600 million times over.  This latest investment has bought Intel speaking rights in a key developed market, along with its previous investments in various other emerging markets.  This is turning out to be an eventful summer.

Skylight Research