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XohmCOMPANY PROFILE
Established: 2006
Home Base: Herndon, Va.
Employees: 700+
Funding: Business unit of Sprint/Nextel Corp.
Imagine being able to use the Internet at nearly the same speed as in your home or office, wherever you go, on any device. That’s the promise of Xohm, Sprint’s Mobile WiMAX service that the company is planning to roll out this May. Currently being tested in Chicago and the Baltimore and Washington, D.C., areas, the service, expected to offer download speeds of 2 to 4 Mbps and upload speeds of 1 to 3 Mbps, could very well bring back the 683,000 customers who left Sprint last year—and then some.
“We feel like we’re on the precipice of doing something great with technology, for the industry, and changing the way people interact with the Internet,” said Atish Gude, senior vice president of mobile broadband operations for Xohm. “Similar to what cellular did to the wired line, this technology will do to wire-line broadband.”
Bold pronouncements notwithstanding, when the speed of the network catches up to the processing ability of chips, many of the video-intensive Internet features you know and love will be available anywhere.
“The network is going to be fast enough at some point soon where we’re going to be able to have a conference call using a cell phone and watch people’s lips move,” said Jeff Kagan, a telecom analyst. “That’s just what we’re going to be doing with our wireless devices, and that’s what this kind of connectivity will help bring.”
Why the Competition Should Care
Nextel had been experimenting with WiMAX for nearly four years before it was acquired by Sprint. And now that the network is almost live, Xohm has about a two-year head start on competing technologies like LTE (being adopted by AT&T and Verizon Wireless).
Instead of thinking of Xohm as merely a faster cellular service, “customers really perceived this as wired broadband being relieved of the wire, and they wanted their applications to work at the seemingly broadband pace,” Gude said. “People changed their behaviors in terms of how they worked.”
Sprint could also change the economics of wireless Internet access with widespread adoption of Xohm. “We believe the customer perception around broadband pricing starts with cable and DSL,” Gude said. Since it will be relatively cheap to embed in future gadgets, customers will likely buy a number of devices with WiMAX chips, and having them pay access fees for each doesn’t make sense. “The company is envisioning a subscription model that allows the customer to use one account for multiple gadgets,” Gude added.
Since Sprint will not be subsidizing the devices (as is the current practice among telecoms) the multiple-year contracts and early-termination fees that are the bane of every cell phone owner will not be part of the Xohm business model.
“If somebody wants to go buy a Garmin that has WiMAX, it may be $10 to $15 more, but because nobody subsidized it, and we the carrier didn’t take on a risk, we can afford to charge much less for the service,” Gude explained. “We drive down the monthly recurring charges to a level that is much more conducive to driving adoption.”
Chances are that LTE technology will be more widespread once it is fully deployed, but Mobile WiMAX won’t necessarily need a ubiquitous footprint to attract customers. “If [Xohm] can build out a network that’s not quite as large but offers a different price point and different experience based on the technology, that’s a likely way to differentiate themselves,” said Chris Silva, an analyst at Forrester. “They’re using WiMAX as a way to compete where only they can compete and win in that regard.”
Chance of Success
Sprint is putting a lot of eggs in this particular basket in an effort to win back the thousands of subscribers who defected to other networks. But just because Sprint builds it doesn’t mean people will come. The success of Xohm will depend on there being a plethora of devices with WiMAX chips. Initially, Sprint plans to release modem cards, but it has lined up industry heavyweights such as Ericsson, Google, Motorola, Nokia, and Samsung to embed mobile WiMAX in their devices. Intel, another partner, has also prodded Acer, Asus, Lenovo, Panasonic, and Toshiba into using WiMAX-enabled chips in their laptops.
Even then, it will take some time for Sprint to see a measurable effect. A December 2007 report by Forrester Research predicted that Sprint will have less than two million Xohm subscribers by the end of this year. In other words, even though people might like the idea of the full Internet on their notebook or in the palm of their hand, they may not be quite sure how to best use it.
Silva doesn’t see widespread adoption of Xohm until 2010 or 2011, when large companies start refreshing their laptops and other devices with WiMAX-enabled chips. By that point, though, “it’ll already be pretty common in consumer devices, but it really doesn’t make sense until you see a large enterprise fleet upgraded with WiMAX chips.”
Sprint can’t afford not to make a move now, even though it may require an infusion of capital to make this 4G network a reality. That’s why Sprint and wireless Internet provider Clearwire resumed talks in January—after the two companies ended a deal in November. And that’s why The Wall Street Journal reported that Sprint had approached Best Buy and Google about financing.
“If they don’t make the investment,” Kagan said, “they’re going to remain just a wireless company.”
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