Sprint-Nextel (S) launches the first 4G smartphone in the U.S. -- the HTC EVO 4G, running Google's (GOOG) Android mobile phone operating system, will be available June 4. You'll be flooded soon -- if you haven't already -- with advertising touting the miracles of the new-generation device.
That's because Sprint has bet its future on the WiMax 4G technology that the new phone runs on. WiMax 4G was created with Clearwire (CLWR) and is supported by tech giants, including Intel (INTC). Sprint has about 50 million wireless subscribers in the U.S., but unlike larger rivals AT&T Wireless (T) and Verizon Wireless (VZ), the company has been losing customers.
Rival 4G Standard
Sprint's move into faster wireless 4G may draw customers from rivals due to its edge over 3G in speed (although some initial tests of the EVO 4G didn't find impressive speeds). But AT&T and Verizon will launch their own 4G networks on the Long Term Evolution (LTE) standard, probably beginning next year. There are some indications that Verizon could begin a major deployment of its 4G products within the next three quarters. The company says it may attempt to offer coverage in 25 to 30 of America's largest cities before the end of 2010.
But LTE 4G is an infrastructure play. The systems put in place to deliver the product to consumers are complex and expensive. Getting them in place quickly will be a challenge that will fall to large telecom-equipment companies.
Nokia Siemens Networks, one of the biggest wireless system providers in the world, gave a glimpse into its plans. The company told Reuters that it's setting up 30 trials for LTE worldwide and is in talks with 15 large carriers about creating commercial networks. "It's unbelievable how the momentum is growing, this is what we're seeing with our customers," says Thorsten Robrecht, Nokia Siemens' head of LTE product management.
As difficult as the technology is to deploy, 4G's marketing may be more difficult. It's still not clear that most consumers will decide they need anything faster than their 3G connection, which is adequate for calls and, in many cases, web surfing and data downloads. And carriers may charge more for 4G and add extra fees for data use. Apart from Sprint's, no pricing plans for 4G products have been released so far.
Another challenge for 4G is how quickly handset companies can get attractive 4G enabled phones into the market. It's rumored that Apple (AAPL) will have a product available soon, hot on the heels of the Android EVO 4G's launch. But Jobs & Co. still have a relatively modest share of the smartphone pie. Can carriers find handsets with useful features and buzz to market?
Sprint has already begun touting its 4G product. The EVO 4G is the canary in the coal mine for the industry, and it should know a great deal about adoptions rates before the end of this year. Handset aside, the 4G network's performance may be spectacular, but spectacular may not be enough to get the crowds of 3G users to give up or switch their service.
What Is Your Risk Tolerance?
Answer the question "What type of investor am I?".View Course »