Sidecut Reports

Another vendor video, this time from our friends at Clearwire. A bit biased, but you have to love a commercial that doesn’t use words, but instead just shows one service against another in about as fair a test as you could prepare.

The funny footnote to this video is that the first time I saw Clearwire show it — during a keynote speech at the 4GWE show in Los Angeles this past September — the footage clearly showed the driver doing all the iPhone manipulations, which made the audience laugh out loud (taking driving while texting to a new level). Since then Clearwire has cleaned it up so that it appears the passenger is doing the testing. Smart move.

You had to look hard through the Sprint earnings call info to find any information on WiMAX services being offered by the company, but we did find a few nuggets worth highlighting here. One that sort of jumped out of the transcript of the call (thanks, Seeking Alpha!) was Sprint CEO Dan Hesse’s pledge to subsidize hybrid 3G/4G devices, a marked departure from that of WiMAX partner Clearwire, which is adamant in its refusal to subsidize device costs. From the Sprint call Thursday, Hesse said:

Actually as we go into next year, when we expect to launch a number of multi-mode 3G/4G devices, which we think will be very hot, those will carry some significant subsidies as well. So I think it’s a trend that’s kind of with the industry to stay. But it’s not necessarily bad for the industry health, it just changes the economics in that the subsidy expenses will be higher.

Later on in the call, Hesse seemed optimistic that (like Clearwire), Sprint’s 4G sales would pick up toward the end of the year as bigger markets like Chicago and Dallas go live:

And also, very importantly, as I mentioned in my comments, it is too early for it to move the needle a lot but it’s going to give us momentum, we hope, into 2010 and that’s 4G. We have launched 17 markets but most of the POPs for 2009 will come near the end of the quarter, but that’s giving us some good lift in mobile broadband, in particular in those markets. And as we expand the device line up in 4G—dual-mode 4G/3G—it will really put us in a good position, going forward, kind of leaving 2009 and going into 2010. So we think 4G and dual-mode devices, as they come on board, will start to give us some lift going forward.

Hesse later noted that Sprint’s ability to resell WiMAX from Clearwire helps keep network capital expenditures (aka capex) off Sprint’s books (in case you forgot, that was one of the main reasons for Sprint to do the Clearwire merger):

The other thing I will say, is on for future in terms of capex, think of Clearwire, as well, as the next wave of capex requirements in the U.S., particularly on the post-paid side, is going to be building out 4G. And think of Clearwire as helping us almost cap, because we will still continue to improve coverage and increase capacity in our 3G network. But we can mitigate the amount of capital required for continued expansion of capacity in our 3G network with 4G. So as you are thinking about—it seemed like you thought our capex spending might be perhaps low going forward. A lot of that capex, the data capex, is being picked up on the Clearwire side.

If you were hoping to hear more news about exciting new devices for WiMAX networks in the U.S., the Sprint Open Developers Conference was a bit of a letdown Tuesday. While hints of future devices were dropped again — there will be a WiMAX phone in 2010, maybe — firm details, the kind you can plan purchases around, were nowhere in sight. And judging from the comments from one Sprint exec, you can stick a fork in the Mobile Internet Device idea, at least until device manufacturers decide to start charging a lot less for MIDs like the Samsung Mondi.

Sorry I don’t have the exec’s name — I came in late to the keynote panel — but someone clearly from Sprint was asked about MIDs, and the reply wasn’t encouraging. Though the Mondi is available from Clearwire in its current markets, its high price — $449.99, not including any rate plan — was noted by the Sprint exec as something that keeps wallets in pockets.

“With MIDs, when you take the price and then add rate plans, customers start to get a little uncomfortable,” said the Sprint exec on stage. “It’s just not a scalable model to get a lot of traction.” A few remarks later, the same exec basically said that if device manufacturers want to get MIDs on WiMAX networks, they may have to eat part of the costs to seed interest. “We [service providers] aren’t going to accept all the risk,” the Sprint exec said.

Zang! Tough words, but we pretty much agree with Sprint on the whole MID thing — in our most recent CLEARWIRE NTK report for October 2009, we called the Mondi “an overly expensive, somewhat confusing form-factor machine that wasn’t big enough to do ‘real’ laptop work, and didn’t contain a cellular link to make voice calls an easy proposition.” We also said the $450 list price was way too high for such an esoteric device, especially compared to the $199 list price for the Apple iPhone 3GS. But that also means that Sprint isn’t going to stick its neck out on unproven devices; remember, CEO Dan Hesse dissed Android just one short year ago. Unfortunately for WiMAX users, that means more dongles and laptops.

There was more disappointment for developers hoping to hear more about the cool things WiMAX might enable them to do — network APIs for attributes like location-based services and QoS hooks are apparently still on the drawing board, answers that prompted one twitterer in the audience to note that “Top Q&A response at dev conference is “its on the roadmap.” While we are bullish on things like the mobile broadband routers (which we call Pocketspots) that Sprint has already launched, cool toys that exploit WiMAX’s attributes are things we apparently won’t see until much later in 2010.

Or, as we said in our CLEARWIRE NTK report for October 2009: “Without a doubt, the coolest thing about WiMAX is its ability to provide a true broadband connection with cellular mobility. One of Clearwire’s biggest problems, however, is a lack of a compelling reason to take advantage of that mobile connection — and the dearth of devices that would allow you to even try.”

Unfortunately, nothing we heard Tuesday changed our mind. The wait continues.