A report from the Wall Street Journal suggests Clearwire will abandon its retail stores and spend its dwindling cash reserves on building out its 4G WiMAX network. The decision to move away from retail is music to Sprint’s ears as the wireless carrier has long been at odds with Clearwire over its retail strategy. The wireless company now operates 140 stores nationwide and uses these outlets to sell USB modems, wireless hotspots and home modems with 4G wireless service. This retail activity competes directly with Sprint which also sells 4G mobile devices with accompanying wireless service.
As Clearwire’s financial problems mounted, Sprint has pushed the wireless company to shift away from a competitive retail effort and begin to focus its resources on building out its network. Those that have followed Clearwire has noticed its pace of 4G expansion started out strong, but has slowed in the second half of 2010. WiMAX now covers 100 million potential customers and the company has fallen short of its 200 million customer goal.
The next 12 to 18 months could be critical for Clearwire as it faces increasing competitive pressure from Verizon, T-Mobile and AT&T. If the company wants to stay in business, it will need to expand its network at an increasing rate or face being overshadowed by the other wireless carriers. Expanding a network takes cash and Clearwire has reportedly a years worth of reserves. If the wireless company does drop its retail stores, it will liberate some much-needed cash that can be used for its WiMAX network infrastructure. Sprint may also be more willing to invest in Clearwire as the company would be in a better position financially.
[Via WSJ]