Sprint Nextel Bets $5 Billion on WiMax
Under its new WiMax agreement with Clearwire, Sprint Nextel expects the two partners’ WiMax build-outs will be reaching as many as 100 million potential customers by year-end 2008, with Sprint providing WiMax coverage to 70 million people and Clearwire to 30 million. Sprint Nextel’s WiMax service will be marketed under the brand name Xohm. 
Sprint Nextel says it intends to begin offering WiMax services in the Chicago and Baltimore/Washington markets by the end of this year under the brand name Xohm (pronounced “zoam”), with commercial services slated to begin in the first half of 2008.
“The demos were really impressive in the way that they showed how life on the mobile Internet would be,” said Sprint Nextel CTO Barry West during this week’s Sprint Ahead Technology Summit. At speeds of up to five times faster than today’s 3G wireless, “the throughput was very impressive and lived up to its promise.”
West said he expects the name Xohm to generate considerable buzz among Internet-savvy users. In Sprint Nextel’s marketing tests, the name Xohm “scored amazingly above everything else we put in there and a lot of people related it to being in a zone or an area where everything could happen,” West explained. “There’s no place like Xohm,” he added.
The Need for Speed
“We have people talking about WiMax for all sorts of things, not just phones,” noted Gartner 
research director Carolina Milanesi. “It will take a while for the market to show growth, but the potential is there and we will be seeing vendors showing more WiMax products going forward.”
On the device end of the spectrum, Sprint Nextel said its Xohm ecosystem partners, which include Motorola, Nokia, and Samsung, already have committed to embedding 50 million WiMax chipsets in various devices that promise to fulfill the mobile market’s ever-increasing need for speed.
And in addition to the launch of Xohm PC cards for existing machines, “Intel will be embedding WiMax chipsets into new laptops in much the same way that they now do with Wi-Fi,” Milanesi said.
A Huge Investment
Under its new network-sharing agreement with Clearwire, Sprint Nextel expects the two partners’ network build-outs will be reaching as many as 100 million potential customers by year-end 2008, with Sprint providing coverage to 70 million people and Clearwire to 30 million.
To grow its Xohm network coverage to approximately 125 million people before the end of the decade, Sprint Nextel said it will be investing about $2.5 billion in capital by the end of 2008 and another $2.5 billion by year-end 2010.
By 2011, however, Sprint Nextel projects that its Xohm initiative will be generating a positive free cash flow over and above its anticipated capital expenditures, working capital, and other cash requirements.
If you look beyond mobile handsets and think about all the other possibilities, then Sprint-Nextel’s investment just might make sense, Milanesi observed.
