I'm always surprised when the twists and turns of properly-functioning markets result in over-reactions from all corners. One case in point is the recent behaviour of the now-global stock markets, which go up and down so rapidly as to give even long-term investors at least a mild case of heartburn.

Another important case in point was recent news that US WiMax leaders Clearwire and Sprint Nextel are dropping plans to jointly build out a national WiMax footprint. I was a bit surprised by this news even though I've long been a bit of a WiMax skeptic. My skepticism arises partly because it's my job as an analyst to be skeptical and partly because most analyses of WiMax have been performed in isolation, without considering the overall macroeconomic picture as well as the competitive environment for wide-area mobile broadband.

I was also irritated with the initial WiMax marketing five or so years ago. That marketing featured overhype reminiscent of the early days of Bluetooth, which itself was originally promoted as a wireless personal-area network, local-area network, serial/parallel-port replacement and, to paraphrase an old Saturday Night Live routine, a desert topping and floor wax.

Regardless, the WiMax Forum as an organisation has made the transition from specifying interoperability for the boring point-to-point microwave business to the hip and cool world of mobility, which is where Clearwire and Sprint both want to go. Of course, that's where everyone wants to go, and the competition is heating up, particularly with respect to the Third Generation Partnership Project's (3GPP) Long-Term Evolution (LTE) effort. Verizon Wireless, for instance, has said it is committed to developing an LTE network.

One of the key elements in WiMax's favor when Sprint decided more than a year ago to go with the technology was that WiMax had a significant time-to-market lead over other 4G (fourth-generation) technologies such as LTE. But the reality of the situation has since become apparent: As is always the case with high technology and especially with wireless, it takes a lot longer and costs a lot more money than planners assume in the early, euphoric days.

Sprint must face some serious problems. It's losing subscribers to its core cellular business, the company is losing shareholder value, and it recently lost its CEO, although it wasn't his idea to depart. Some major shareholders see WiMax as a distraction and not a strategic direction for the future.

Of course, stockholders usually behave that way; vision is not their strong suit. Show them a stock-price graph that is always up and to the right, and management can pretty much do what it wants. When that direction heads the other way, well, the future is simply too far away to matter. From their perspective, Sprint already has deployed EV-DO (Evolution-Data Optimised), which should carry them regardless of what happens with WiMax. That 3G technology could even be deployed in Sprint's 2.5-GHz spectrum, which is currently earmarked for WiMax.

Similarly, Clearwire has a going business in broadband, although its current technology is also not based on WiMax. The company recently announced a PC Card adapter, and its service is now nomadic if not the fully mobile.

One gets the impression that Intel has been highly influential in convincing Clearwire to take the WiMax plunge. After all, Intel needs to sell a ton of WiMax chips to make its investment in the technology pay off, and the carriers are key to achieving this goal. But Clearwire doesn't really need WiMax to be successful, and a full transition to WiMax will take many years and cost billions of dollars. Like Sprint, Clearwire has lost significant market valuation, and its shareholders are not happy.

We might therefore conclude that WiMax is critical to neither Clearwire nor Sprint. Still, powerful interests, most notably Intel, are at work here, and I think we're simply seeing a delay in the WiMax game, not the end of an otherwise noble experiment. But since most users really don't care what specific technology they use - price, availability, throughput, reliability, and customer service are instead the keys to happy customers - the road ahead for WiMax will be anything but easy.

Craig J. Mathias is a principal at Farpoint Group, an advisory firm specialising in wireless networking and mobile computing. This article appeared in Computerworld.