MARAVEDIS

The Clearwire network faces two basic limitations needed to muster device availability: 1) coverage which determines TAM. total available market size, and 2) Extent of 'true mobility'. Both of these are impacted by operation in 2.5GHz frequency: signals do not travel as far or penetrate as well into buildings and other obstacles between base stations and users.

Handset manufacturers thinking about developing new or modifying existing devices to work on the Clearwire-Sprint network start with questions about how large the potential market will be. That determines the amount they can spend and time frame for development among the many alternative market opportunities they might pursue.

The handset market has always been a factor in network service decisions of consumer and enterprise customers: Availability of the RIM Blackberry line has been a pivotal requirement for many corporate clients. More recently, the Apple iPhone has been pivotal for a gain in subscribers by AT&T despite consumer complaints about network capacity. This has driven operators to work forge agreements to work closely on development and put efforts into marketing in exchange for availability to the hottest devices. The relationships have morphed as the 'device' has become a vehicle for popular applications: a triumvirate of open mobile web OS platform environment, device, and applications store(s) has emerged. The combination puts much more emphasis on user choice and, subsequently more control into the hands of companies that control the applications development environment.

Apple iPhone is the benchmark for the triumvirate device business model that has galvanized other suppliers to mount similar efforts. The most promising of these efforts centers around Google Android OS environment: Several suppliers have come out with devices or in development. And Google continues to improve capabilities, adding a social networking framework, more extensive GPS and location based services, and unified messaging. New mobile office and other applications are are their way which can be harnessed by handset and applications developers.

This raises questions about the assertion that WiMAX has a time to market advantage: the market for any wireless technology hinges on deployed coverage. Commercial availability means little if the networks are not widely deployed. Since handset and applications developers justify efforts based on TAM, the ease of quality of coverage are basic requirements.

A case in point exposes these factors: While Motorola is the leading infrastructure supplier for the Clearwire network deployments, they have come out with their DROID phone and MOTOBLUR social networking skin/apps interface. Our analysis concludes that Motorola's new offering comes closest to competing for market share against the iPhone juggernaut. DROID is available on a temporary exclusive basis on the Verizon 3.5G network.

Talks with handset suppliers reveals a rough consensus that coverage must reach at least 100 million POPs before concentrated development efforts to deliver leading edge handsets are pursued. Clearwire remains at the stage of network expansion that awaits national coverage compelling of accelerated growth.

My report: "Sizing up the Competitive Opportunities for Verizon and Clearwire" is now available.

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