WiMax gets closer and further away at the same time

A strangely cryptic article in the New York Times today announced that several companies had banded together "to build the first of a new generation of nationwide wireless data networks" in the US (link). I read it and thought to myself: what, another new vaporware wireless technology? I couldn't make sense of the article, so I went to the websites of some of the companies involved. It turns out the announcement isn't a new vaporware wireless technology, it's my favorite old vaporware wireless technology, WiMax (link). Sprint finally figured out what to do with it.

The announcement was both interesting and supremely frustrating. The interesting part was that Sprint has brought several promising investors into WiMax, including Google. That's right, Google is launching a wireless network, if only as a minority investor. (And it got a sweet deal, which I'll explain below.) The unbelievably frustrating part is that Sprint has pretty much slipped the deployment plan for WiMax by another two years. It's hard to get excited about a new technology, no matter how great the investors, when I have zero confidence in the companies' ability to deliver.


Here's what was announced:

Sprint and several companies have banded together to buy Clearwire, the other wireless company that had been building a WiMax network in the US. Clearwire will be merged with Sprint's WiMax division, the company will be managed by a mix of Clearwire and Sprint executives, and will be headquartered at Clearwire's site in Washington state.

Investors in the merged company, to be called Clearwire, include Google, Comcast, Intel, TimeWarner Cable, Bright House Networks, and Trilogy Equity Partners. Intel and Comcast are investing about $1 billion each, TimeWarner and Google about $500 million, Bright House $100 million, and Trilogy $10 million.

Google gets to be the preferred search provider for both Sprint and Clearwire, will provide apps (including Gmail, YouTube, and Maps) for bundling with devices, and Clearwire will sell devices running Google Android. Google and Clearwire will also partner to develop advertising, applications, and create the operating principles for the network (link). Google said it will work with Clearwire to create:

An open Internet protocol to work with mobile broadband devices...and implementing other open network practices and policies....The network will: (1) expand advanced high speed wireless Internet access in the U.S., (2) allow consumers to utilize any lawful applications, content and devices without blocking, degrading or impairing Internet traffic and (3) engage in reasonable and competitively-neutral network management.

Intel will provide WiMax chips (which it was doing anyway), and Sprint, TimeWarner, Comcast, and Bright House will all become Clearwire resellers.

The new company will be 51% owned by Sprint, and its governance structure is so nuanced that I won't even try to explain it here.

As part of the announcement, Sprint slipped in an estimate that the new Clearwire network will reach 120 million to 140 million people by the end of 2010 (link).


What it means

Death to the Xohm. On a personal basis, the most exciting part of the announcement is that Sprint is apparently dropping the brand name Xohm, which it was using for its WiMax services. I am very sympathetic to the troubles that companies have finding brand names that aren't already trademarked. But even by my lowered standards, I thought Xohm was a bizarre name. To me, it sounded like something you'd read in a bad science fiction novel. The Xohm would be a race of homicidal crustaceans bent on destroying humanity.

"Captain, the Xohm have deployed a quantum weak force destabilizer!"

"Good God! That could rupture the very fabric of space-time!"

Google gets a wireless network. The company that made out like The Xohm in this deal is Google. For just $500 million (little more than gas money for the corporate jet in Google terms), the company gets preferred placement for its services on both Clearwire and Sprint; a showcase for its apps, advertising, and OS; and the opportunity to design the business model for a national wireless network. No wonder Google didn't bother to bid seriously in the recent US wireless spectrum auction -- why build a network when you can play with one for a tenth the price?

Comcast, Time Warner, and Bright House all get quadruple play options. They can pair Clearwire services with their current cable businesses to deliver advanced bundles of wireless services, Internet access, telephony, and television.


Will it succeed?

The reaction to the deal on some prominent tech blogs seems to range from lukewarm (link) to intensely negative (link). But I think there's a lot to like about it. The involvement of Google means we're very likely to get a pretty much open ecosystem on a major wireless network, which Silicon Valley has been collectively screaming about for years. The size of the investments mean there is a lot of money available to build out the network. People ought to be dancing in the streets here, but instead most of them appear to be either yawning or throwing spitwads.

I'd be out there dancing myself if it weren't for the slip in the schedule. A year and a half ago Sprint announced that its WiMax network would reach 100 million people by the end of 2008 (link). Now Sprint says that by the end of 2010 the network will reach 120-140 million people. So in the last 18 months, the schedule has basically slipped by 24 months. It's going backwards. At this rate we'll have passenger rockets to Pluto before we have WiMax service.

Hopefully the management of the new Clearwire will be dominated by people from outside Sprint. I want to believe that they can build out this network; we need it both for the service itself and as an example of how to grow an open mobile ecosystem. But it's very hard to trust people who have missed their targets as badly as these guys have.


Some other interesting commentary on the deal:

Muni Wireless on the cable companies' motives for investing (link).
Fierce Wireless explains the ownership structure (link).
Sprint's amazingly complex press release (link).

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Thanks to Xellular Identity for including last week's post on Adobe in the latest Carnival of the Mobilists (link).

Google, the OS company

The bottom line: Google is now an OS company.

The fact that Google's recently-announced OS products are aimed at mobile devices and social networking sites is interesting, and I'll talk about the impact of that below. But it's secondary. I think the big, really important change is that Google has now jumped with both feet into the middle of the operating system world. That potentially has huge implications for the industry.

The impact will depend a lot on how Google follows up. If it pours substantial energy and resources into its OS offerings, it will be extremely bad news for Microsoft and other companies trying to charge money for their own platforms. On the other hand, if Google doesn't make a serious long-term commitment, it will embarrass itself deeply. This isn't like launching a new web application -- an OS has to be complete, and it has to work properly in version 1, or there won't be a version 2.


What they announced

It's kind of ironic. For years after Google became a prominent web company, people speculated about whether or when it would create its own OS. The logic was that Microsoft has its own OS, and Google was challenging Microsoft, so Google would create its own OS too. But then as the years went by and it didn't happen, people moved on to other subjects. The speculation died out. But one of my rules about the tech industry is that "obvious" things happen only after everyone in the industry has written them off. So I guess Google was due.

The company has been creeping toward the OS space for a while. Google Gadgets is an API to create small applications that run in web pages, and Google Gears is code that lets web apps run offline, making it easier for them to challenge desktop applications. But they were both relatively low-profile (or as low profile as anything Google ever does). But in the last couple of weeks, Google made two much more assertive announcements:

--OpenSocial is an effort to create a shared platform for applications that can be embedded within social websites (link).

--The Open Handset Alliance is an effort to create a shared platform powering mobile devices (link).

Although they're aimed at very different parts of the industry, they're both efforts to create a standard platform where there was fragmentation; and they're both alliances of numerous companies, with Google providing most of the code and the marketing glue. I think there's a recurring theme here.


Details on the Open Handset Alliance

Open Social was covered very heavily when it was announced a couple of weeks ago, so I won't recap it all here. If you want more details, Marc Andreessen did an enthusiastic commentary about it on his weblog (link).

The OHA announcement was today, and I want to call out some highlights:

--It's built around a Linux implementation called Android. Android will be free of charge and open source, licensed under terms that allow companies to use it in products without contributing back any of their own code to the public. This will probably annoy a lot of open source fans, but it's important for adoption of the OS, as many companies thinking about working with Linux worry that they will accidentally obligate themselves to give away their own source code.

--Google is creating a suite of applications that will be bundled with Android, but they can be replaced freely by companies that want to bundle other apps, according to Michael Gartenberg (link). There is a lot of speculation, though, that if you bundle the Google apps you'll get a subsidy from Google. The folks over at Skydeck estimate the subsidy could be about $50 per device (link). That might not sound like huge money to you and me, but keep in mind that mobile phone companies routinely turn backflips to squeeze 25 cents out of the cost of a phone. When you sell millions of phones a year, it adds up.

--A huge list of companies participated in the announcement. That's not as impressive as it sounds; when you have a well-known brand, a lot of companies will do a joint press release with you just for the publicity value. But a few stood out:

Hardware vendors. Samsung, Motorola, LG, and HTC all endorsed the OS. HTC and LG gave particularly enthusiastic quotes. The first three companies have all been playing with Linux for some time, so I wasn't surprised. But HTC is another matter -- it is the most innovative Windows Mobile licensee, and Microsoft must be very disturbed to see it blowing kisses at Google.

(A side comment on Motorola: For a company that said it wanted to consolidate down on a small number of platforms, Motorola is behaving strangely -- it jumped all over Symbian a couple of weeks ago, and now is supporting Android as well. I think it has now endorsed more mobile operating systems than any other handset vendor.)

Operators. Participants in the announcement included NTT DoCoMo (a long-time Linux lover), KDDI, China Mobile, T-Mobile, Telecom Italia, Telefonica, and Sprint. That's a very nice geographic spread, and ensures enough operator interest to make the handset vendors invest.

--Google claims all Android applications will have the same level of access to data on the phone. That's pretty interesting -- most smartphone platforms have been moving toward a multiple-level approach in which you need more rigorous security certification in order to access some features of the phone. I'll be interested to see how the security model on Android works.

--We'll get technical information on the OS November 12, and the first phones based on Android should ship in the second half of 2008.

--Although Android's first focus is mobile phones, the New York Times reports that it can be used in other consumer devices as well (link).


What it means to the mobile industry

It all depends on the quality of Google's work and the depth of its commitment. If Android has technical or performance problems, it could sink like a stone. If it doesn't have enough drivers or has poor technical support, the handset vendors will avoid it. If the developers can't create good applications, users won't want it. This is a very different business for Google -- handset vendors and operators will not tolerate the sloppy, indifferent technical support that Google provides for its consumer web apps.

If, on the other hand, Google's platform really works and the company invests in it, I think it could have some very important impacts.

Impact on Windows Mobile: Ugliness. The handset companies endorsing Android are also Microsoft's most prominent mobile licensees. I doubt any of them are planning to completely abandon Microsoft (they don't want to be captive to any single OS vendor), but any effort they put into Android is effort that doesn't go into Windows Mobile. So this is ominous.

The whole mobile thing just hasn't worked out the way Microsoft planned. First it couldn't get the big handset brands to license its software, so it focused on signing phone clone vendors in Asia, thinking it could use them to pull down the big guys. But Nokia and the other big brands used their volume and manufacturing skill to beat the daylights out of the small cloners.

Now Google is coming after the market with an OS that's completely free, and may even be subsidized. This will put huge financial pressure on not just Windows Mobile, but all of Windows CE. Even if Microsoft can hold share, its prospects of ever making good money in the sub-PC space look increasingly remote.

Impact on Access: Ugly ugliness. How do you sell your own version of Linux when the world's biggest Internet company is giving one away? I don't know.

Impact on Symbian: Hard to judge. Symbian is the preferred OS of Nokia. As long as Nokia continues to use Symbian, it stays in business. The question is how much it'll grow. After years of painful effort, Symbian just managed to get increased endorsements from Motorola and Samsung. Now Google is messing with both of them. Japan has been a very important growth market for Symbian, now Android is endorsed by both DoCoMo and KDDI. All of that must feel very uncomfortable. If nothing else, it's likely to produce pressure on Symbian to lower its prices. And Symbian should be asking what happens if Android turns out to be everything Google promises -- a free OS that lets handset vendors create great phones easily. It's not fun competing against a free product that's been subsidized by one of the richest companies in the world (just ask Netscape).

Maybe if Symbian agrees to enable Google services on its platform it can get the same subsidies as Android does. It's worth asking. If not, maybe Symbian should be looking for other places where it can add value in the mobile ecosystem.

Impact on mobile developers: Potentially great. Mobile developers have suffered terribly from two things: They have to work through operators to get their applications to market, and they have to rewrite their applications dozens of times for different phones. If Android produces a single consistent Java environment for mobile applications, that would be a big win. And if it can open up the distribution channels for mobile apps, that would be great as well. We don't have enough details to judge either outcome yet, and the app distribution one depends on business arrangements that may be outside Google's control.

Impact on Apple, RIM, and Palm: Probably none at all. A lot of the coverage of Android is positioning it as some sort of challenger to iPhone and RIM.

I don't buy it.

Apple, RIM, and Palm all make integrated systems in which the software and hardware are coordinated together to solve a user problem. Android, by contrast, is only an operating system. It's plumbing, not the whole house. Unless Google's handset licensees magically develop the ability to design for users -- a feat equivalent to a giraffe sprouting wings -- their products won't be any better as systems solutions than they are today. The OS hasn't been the thing holding them back, and changing OS won't alter the situation.

Android puts interesting financial pressure on Microsoft, but it doesn't directly solve any compelling user problems. If it eventually drives a great base of mobile applications, that might eventually be attractive to some users. But in that case the systems vendors could just add a copy of Google's application runtime (it's open source, they can grab it anytime they want). Or they could host their devices on Google's plumbing. Palm and RIM might both benefit if they could transfer engineers away from core OS and toward adding value that's visible to users.


Impact on the tech industry: This isn't just about mobile phones

I have no access to Google's internal thinking, but even if it sincerely believes it's only doing a mobile phone OS, I don't think it can or will stop there. Technology products often develop a momentum of their own, no matter what was intended at the start. The lines between the computing and mobile worlds are breaking down already, and if Google creates an attractive software platform that's free of charge, that platform will inevitably get sucked into other types of devices. I'm not saying that Android is going to end up in PCs, but if it's functional and well supported I think it could end up running on just about everything else that has a screen.

Besides, if you look across all of the recent Google announcements, I think it's clear that Google has a larger agenda: It wants to break down walled gardens, because they interfere with Google's ability to deliver its services. It has even developed a standard methodology for attacking them: Create a consortium so you don't look like a bully, and fund an "open" alternative to whatever is in the way. They are doing it to Facebook, and they're doing it to Windows Mobile. Google doesn't even have to make money from the consortium, as long as it clears the ground for its services to grow.

Take a lesson from evolutionary history. The most successful animals are not those that adapt to the environment; they are the ones that reshape the environment to match their needs. I think that's what Google is doing. It's going to use open source and alliances to suck the profitability out of anybody who creates a proprietary island that it can't target.

It'll be interesting to see if and how Google applies this principle to the upcoming frequency auction in the US.

Or to anyone else who gets in its way.