This Week in WiMax
Why Clearwire should cut its prices even lower than half off
When we looked at Clearwire's pricing schemes earlier this year, we predicted that there would be price cuts and promotions when kids started going back to school. Almost unnoticed, that prediction came true this week when Clearwire announced half-off pricing cuts (until Oct. 31) that knocked down the price of an unlimited mobile WiMax plan to $22.50 a month. It's a good start, but Clearwire needs to go lower -- maybe in half again, closer to $10 a month for unlimited service -- to really shake things up and give people a no-brainer reason to try WiMax out.
If such statements mean that I won't be in charge of anyone's profit and loss statements anytime soon, I understand. But ever since Xohm launched last year in Baltimore and Clear launched this year in Portland, I have always thought the prices were too high, and too close to other broadband options to make cost savings part of the switch-to-WiMax consideration. Granted, there may be other benefits that WiMax services have over other broadband access choices, but in these tough economic times I don't think they are impressive enough to convince folks to vote with their wallets. The small number of new Clear subscriber adds during the second quarter is just confirmation that the service isn't anything close to a must-have yet.
That's where really aggressive pricing can play a role -- and device manufacturer partners should play along, too. Samsung's Mondi, while cool, is the kind of device that probably needs to get used by a bunch of people before anyone figures out what or who it's really good for. Pricing it at $450 is not going to accomplish that goal. If you were choosing a smartphone or mobile Internet device, would you pay twice the cost of an iPhone 3GS on an unproven device that has coverage only in a few places? Not likely. But price the Mondi at $100, with three months' service thrown in, and there would likely be a lot of tire-kicking. And the Clear Spot? Why not make it half-price if someone comes into a Clear store and shows that they have an iPhone? Now that's replacing iPhone connectivity interruptus with high-bandwidth satisfaction.
There are a lot of theories on pricing, and how making something cheap hurts the perceived value. But right now, Clearwire has tons of network capacity and not a lot of people making use of it. Why not give some of that bandwidth away now, betting that you can extract more money from those customers later? Seems like a better wager than trying to convince folks to pay full price in a marketing competition against carriers who spend more on their advertising than you do on your network.
Need to know more about Clearwire and WiMax? My Clearwire NTK report costs less than a large beer at the local Sprint Nascar race. Just $4.95 at the Sidecut store. Also available for the Kindle. Available now for free download is our WiMax Business Deployment Guide.
— Paul Kapustka is the founder and editor of Sidecut Reports, a WiMax analysis site and research service. He can be reached at [email protected]. Special to Unstrung.