Intel Gives Clearwire $600 Million To Avoid Making WiMax Look Bad

from the how-it-all-works dept

Wed, Jul 5th 2006 6:54pm — Mike Masnick

If you've watched Intel's moves over the last few years in the WiMax space, it's become clear that they can't let the technology fail, despite plenty of questions about the technology. Intel has made a huge bet in the space, and over the last couple of years has single-handedly propped up the WiMax market by investing in just about every player in the space -- even those who some might consider Intel competitors. Some of this was clear nearly two years ago when Intel made a huge "investment" in Clearwire -- Craig McCaw's attempt to build a WiMax-based wireless ISP (using pre-WiMax equipment, of course). That deal seemed particularly questionable since the investment came the same day that Clearwire promised to buy Intel equipment. In other words, Intel was paying Clearwire to buy its WiMax technology. Of course, for all the hype about WiMax, Clearwire has been saying that the technology is so weak that it can't withstand people using VoIP services on it. A couple months ago, Clearwire announced that it would go public to raise a necessary $400 million. The details in the IPO filing raised a lot of questions. It didn't have very many customers and needed an awful lot of money to keep spending on infrastructure. All in all, a bad combination. Combine that with Vonage's weak IPO, and you could see problems on the horizon. It seemed unlikely that Clearwire could go out successfully. For Intel, that would be devastating. A bad IPO for Clearwire would raise a lot of questions about both WiMax as a technology and the billions Intel has bet on the technology. So what does Intel do? It throws more money after the problem, dumping $600 million more into Clearwire (and roping Motorola in for another $300), allowing Clearwire to pull its IPO. Problem solved (or, at least, delayed).

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16 Comments

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Rick, 5 Jul 2006 @ 8:48pm

Alaska and Hawaii
I wouldn't put much stock in a company that rolls it's service out in Alaska and Hawaii before New York. It doesn't sound like economically sound decision making to me. Clearwire is not impressing me at all.

I think I'll go dump my Intel stock now. They're throwing money away.
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MRing, 5 Jul 2006 @ 8:50pm

Thats a lot of money to avoid admitting failure...
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MRing, 5 Jul 2006 @ 8:51pm

Re: Alaska and Hawaii
I bet you wish you'd dumped the stock quite a while before now!
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Mike Mixer, 5 Jul 2006 @ 9:14pm

I hope they get it together
This is an unlikely hero story in the making. Ray Kroc failed at everything he touched until he tried selling hamburgers. Something like WiMax would be more choice in an area where it seems all of our choices are being taken away. That is why Intel is doing this. Wireless is the next step but the companies that own all the wired outlets will want to control that too, so it is important for at least one player who isn't a telco or cable company to be running strong to keep everything honest.
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Ahmad, 5 Jul 2006 @ 10:00pm

WiMax
>I wouldn't put much stock in a company that rolls
>it's service out in Alaska and Hawaii before New York

Its obvious that you don't know much about the technology.
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Scott, 6 Jul 2006 @ 7:28am

Re: Alaska and Hawaii
I lived in Hawaii and Clearwire was the only option for myself and many other people who live in remote areas. I was really happy to have it. The quality was not what I would like and it was slower and more expensive than it should be. But I was able to run skype with it. And being able to take the bulky modem/antenna down to a remote beach with my laptop was nice too.

Also, I think it makes perfect sense to roll out the service in areas where there is no broadband competition. The infastructure for wireless is considerably less expensive than rolling out miles of cable to remote areas.
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WirelessGuy, 6 Jul 2006 @ 9:13am

Broadband is tough to sell
I worked at a now non broadband, broadband company called airBand that still exists in technical terms, just not in the style that it was intended 5 years ago when I was there. We had a great product, quick broadband (2-3 days) with decent speeds (up to 6 Mbps) and we though we were going to print money. Well, the problem was that the technology wasn't stable enough to compete with DSL/T-1's and people just like knowing their company will be there tomorrow.

McCaw has done good things for telecom in the past, but most of his companies are built to be sold. Look at what happened to his wireless companies, how debt laden they were but with lots of promise. AT&T paid a boat load for his assets only then to sell later to form Cingular.

They are going after broadband starved markets like Air2Lan did (and was very successful doing) by heading to tier 2 and tier 3 markets first. Competition in tier 1 markets is just too tough, with everyone offering almost free DSL/Data services just to keep whatever market share they can.

The question is whether WiMax will live up to the press hype, or will it crumble like the first version of Clearwire, Teligent, Windstar, Angel Project, etc...It is a decent technology so as long as they build out the system slowly enough, keep their costs down, they can be successful. They just need to look at history and learn from it, or they will be doomed to repeat it.
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Rollie, 11 Jul 2006 @ 4:46pm

Intel Must Believe in Clearwire and Wi-Max
I must say that it looks as though a bright future may be ahead for Clearwire. Any company that invests that much money in a world-wide networking project must know something that we do not. Start saving your money for some of that Clearwire stock when their company finally becomes public......I know I wanna get in on the ground floor!
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Brian, 28 Oct 2006 @ 9:38pm

Re: Alaska and Hawaii
Ah, ignorance is bliss.

They released the Product in Alaska, Hawaii, Texas, and Florida intially (fact).

If you had any idea of the genious behind it you wouldn't be talking. Lets take an example. If you had a new type of house siding that you wanted to sell, would'nt you put it on houses in a place that gets temps below zero? an island in the Pacific? a place that has 120 degree plus days and has tornado and dust storms? a place that is riddled with humidity and hurricanes? It's called making sure your product works in all kinds of conditions.... its just plain good product testing.

There is also the fact that the infrastruccture that it takes to make the service work requires a tower every 2 miles or so. So it would seem that you would start small with cities that take 20 towers to cover as opposed to a city like New York that would take thousands.
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Brian, 28 Oct 2006 @ 9:42pm

Re: Intel Must Believe in Clearwire and Wi-Max
Smart man Rollie is. If you don't already know much about Clearwire's founder Craig McCaw, I suggest a quick google search for his biography. He made something like "Mobile Phones" which back in the day seemed funny, into something we all use daily. Keep an open mind and think of what internet access could be like if you could open your laptop anywhere in the world and be online instantly, just like you were sitting at home in your local coffee shop. =)
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doc, 5 Feb 2007 @ 8:25am

clearwire offering
Does anyone have any information on the current pending public offering for Clearwire stock?
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jeff maslan, 18 Feb 2007 @ 11:54pm

Re: clearwire offering
it goes on sale this week under CLWR.
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Wire less dude, 24 Feb 2007 @ 12:27am

Re: Re: Alaska and Hawaii
The towers are already up they just need permission to use them. Low cost= money for investors! caching!
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John Anthony, 18 Mar 2008 @ 10:01pm

The future is Clearwire
In fact the Clearwire is bigger than ever now so i guess their the clear choice to hit it big in wireless internet.
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clkwong(tm) big have@, 4 May 2008 @ 6:14pm

Intel buy yahoo for wimax
Wimax invest big money , but not application.

We are talking about the computer internet advertise CIA

in video email sever just like the advertise in web sever with

wimax...

thank Jesus's love ,it is Goal that can not see people who can
be seen by computerized wireless network and digital camera...
remarks : Can Not sEE means Idea in MInd!!!
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Jason l Earl, 4 Mar 2010 @ 5:25pm

ClearWire
I must say this is very interesting here I am a contractor workining in the Philadelphia PA market and have been building these sites for some time now and must say that
I,m very impressed from my stand point its alot better than Metrocom I,m sure everyone remembers what happened to them
it flopped and I also built alot of there systems in Houston TX were I also reside and tested the Clear net work and it worked great even though there not openning up that market until April the system works and there already upgrading there systems to handle the high volume user climb
so I see no failure in this only bigger gains
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