On Friday, Sprint Nextel and Clearwire announced that they had dissolved ausing WiMax technology. Together, the companies were supposed to share resources and the cost of deploying a new fourth-generation wireless network to reach about 100 million users in the next few years.
While the companies have said they are still committed to building their networks separately, the news throws into question whether they'll have the money or shareholder backing to actually get the networks built. And without a nationwide network in one of the largest markets in the world, the WiMax revolution could come to a standstill.
"There will be a fourth-generation wireless technology," said Craig Mathias, principal analyst with Farpoint Group. "But WiMax was never a slam dunk as the clear winner. As a technology, there is nothing wrong with using WiMax, but I think the market will evolve slowly over a long period of time."
Still, companies like Intel, which is a technology partner of Sprint's and a financial supporter of Clearwire, say they will continue to roll out new WiMax products as planned.
"We are still moving forward with our next-generation Centrino chips for notebooks and our silicon for ultramobile PCs," said Kari Aakre, a spokeswoman for Intel. "We're disappointed that the agreement didn't work out, but we are committed to continue working with each of them on their WiMax initiatives."
Like so many other technologies that have come before it,. Many have described it as Wi-Fi on steroids because of the fast broadband transmission speeds it can deliver.
But unlike Wi-Fi, which transmits in a radius of 25 feet to 100 feet, WiMax signals can travel miles, making it more similar to cellular-phone technology. And because WiMax uses wider frequency channels than current 3G wireless technology, it uses wireless spectrum much more efficiently, which should help reduce the cost per bit of delivering data over its network.
It's this combination of features that has fueled the hype machine that has turned WiMax from just another wireless technology in a carrier's toolbox into the savior for the wireless Web.
While no one disputes that WiMax is a useful technology, the real question is which markets it's best suited for. For example, most wireless experts agree that WiMax is hugely useful in developing countries, where little to no wireless or traditional telephone infrastructure exists.
But it's unclear whether the technology can become a major player in a developed market like the U.S., where regular broadband is plentiful and cheap and 3G wireless networks already blanket most major metropolitan areas.
Cisco Systems, which threw its hat into the WiMax ring last month when it, sees a much bigger opportunity for WiMax in emerging markets, such as Africa and Latin America.
"We bought Navini to build networks for the emerging markets," said Jeff Spagnola, vice president of worldwide service provider marketing for Cisco. "In most developed markets, WiMax will be used selectively. But the developing world is a Greenfield opportunity. They don't have the infrastructure to begin with, so it's much easier to provide coverage in those areas than to try to fit into some existing wireless model."
Intel and Motorola also see opportunity in the developing world. But Joe Nardone, general director of Intel's WiMax, team said that WiMax is also an attractive technology for mature markets, which will eventually need more capacity than 3G technology will be able to deliver.
"At some point the carriers will have to make a forklift upgrade to get to the next level," he said. "And WiMax provides the capacity and efficiencies that make it a good choice for their networks."