Making matters potentially worse for Nextel: A federal regulation set to take effect starting Nov. Even if its takes competitors a while to catch up, Nextel will have to search for new ways to make itself different - and more desirable - to its customers. "When a company's differentiator starts to erode either partially or entirely, that has to be negative," in this case for Nextel, said Jonathan Atkin, an analyst with RBC Capital Markets. Eventually, Nextel's business could slow, as prospective customers consider other carriers, and sooner or later the competition will shave the delay off their existing products, Cole said. Over the short term, Nextel won't have many problems retaining its customers, because of that critical delay issue, said Andrew Cole, a senior vice president of Adventis Corp., a consulting firm that has tested the other companies' products.īut that advantage could be temporary. Some analysts, however, believe this could be the start of an erosion process for Nextel. By comparison, other networks are configured to "go to sleep" when a phone is not in use, so it takes a couple to seconds for the network to find a phone and put radio calls through, he said. Our network tracks the locations of the phones," so when users press their walkie-talkie buttons, the call goes immediately through, said Drew Caplan, senior vice president of network services for Nextel. "The difference is in the foundation of our technology. The others' products operate with several seconds of delay to set up the initial call, a flaw that current Nextel users won't tolerate, they say. "They don't want to tip off Nextel on what they're going to do." But the competing firms are all rigorously tight-lipped about products and strategy. It's been profitable for a year and is viewed as one of the most successful players in the wireless industry because it has a high-paying and loyal base of business customers - the company has more than 10 million users, many of whom have signed up for the service in groups.Ĭompetitors "have seen what Nextel has done, and they want it, too," said Jane Zweig, chief executive of Wheaton-based market research firm the Shosteck Group. So far, Nextel's proprietary technology - used by more than 90 percent of its customers - has kept the Reston-based company relatively sheltered from some of the vicious effects of competition. AT&T Wireless and Cingular Wireless said they will launch service next year. plan to introduce similar push-to-talk features sometime later this year. Verizon Wireless, the largest cell-phone operator, with 33.3 million subscribers, may launch its service as early as next month, according to some analysts and other industry watchers, although Verizon officials declined to comment. If they succeed, Nextel could become subject to the same hard and costly realities as the rest of the wireless industry: price competition and higher customer turnover. The dual-use phones are especially popular with construction workers, taxicab drivers, emergency workers and others who are willing to pay more for a simple way to radio others.īut Nextel may be about to lose that edge, as a phalanx of its competitors line up to offer similar services. has had one unique advantage: its walkie-talkie phones. In the fierce battle among wireless phone companies, Nextel Communications Inc.
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