Undue Influence?

11:20 AM -- In researching the Sprint Corp. (NYSE: S) WiMax announcement I ran across this diatribe, which is worth a read. I don’t know Mr. Hudson, and I must reluctantly admit I don’t know much about the UMTS TDD Alliance , but I’m assuming these guys are serious in making the point that Intel Corp. (Nasdaq: INTC), by investing billions in its customers, is somehow unduly influencing the business world and perhaps leading to the downfall of civilization as we know it.

OK, that’s not what Mr. Hudson said. But he is implying that the vendors of components and systems can sway customers to do things that might ultimately not be in their best interest. Well, duh, so what else is new? Suppliers of goods and services have been doing that for eons! The whole objective of a capitalist, market-based economy is to sell what you got, separating people from their money, hopefully resulting in a good bargain for both parties (well, at least one of them). But evaluating the deal and the result is really up to each player. Gimme a good deal and I’ll buy whatever you’re selling -- if I need it. Mr. Hudson can't expect us to believe that Sprint would invest in crap just because it’s crap at a good price. Agree with their decisions or not, but those guys ain’t stupid.

As an analyst, I’ve got lots of questions for Sprint, especially as to strategy. And as a technologist, I certainly believe that WiMax will be viable and competitive. But I’m a shareholder in neither Intel nor Sprint -- indeed, I own no equity in any wireless companies, except perhaps through managed accounts that are managed by someone else -- and I think it’s up to those who are to hold management accountable. If Intel is foolishly tossing cash about, and Sprint buying stuff that won’t address its corporate goals, the shareholders will, ideally, throw the bums out.

But let’s not begrudge Intel its position here. It needs a new volume chip business to replace (OK, augment; the PC isn’t dead yet) microprocessors. Its investments could pay off handsomely if WiMax achieves only modest success. Which could leave them laughing all the way to the bank.

— Craig Mathias is Principal Analyst at the Farpoint Group , an advisory firm specializing in wireless communications and mobile computing. Special to Unstrung

lrmobile_rusty 12/5/2012 | 3:45:01 AM
re: Undue Influence? I think Mr. Hudson is absolutely trying to have us believe that Sprint is investing in, "crap just because it's crap at a good price." He does make one point that I suspect is true: Sprint appears to have let Intel, Moto and Samsung choose the 2.5 GHz technology by offering incentives that IPWireless and Qualcomm couldn't match. It may seem like sour grapes, but there is something to be said for making an independent choice of the best technology rather than allowing short term subsidies to sway the decision.

Judging by the recent stock performance of Intel and Sprint, it certainly does seem plausible that Mr. Hudson is right. It's very possible that Intel is desperate to assert control in wireless, and therefore are willing to spend oodles to force their way in. It's also possible that Sprint knows that "WiMAX" is a lot sexier than the other options they could have chosen for 2.5 GHz, and therefore more likely to make up for the customers they are losing due to their poor handset selection.
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