Getting the Wi-Fi Word Out
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There is something about the disruptive capabilities of wireless networking, especially Wi-Fi networking, something about the prospect of being able to use the technology to mount stealth attacks on established businesses, that turns on entrepreneurs.
Just about anyone who knows anything about the technology has probably daydreamed ideas for new ventures that exploit it. It doesn't even take that much imagination. The market clearly needs WLAN integrators, for example. It will also need local and regional hotspot network operators.
One young company in Seattle, Tahoma Networks, plans to do both and argues that there are compelling synergies between the two. It may have a point.
Tahoma president Kevin Lyman, formerly of EMC Corp., got the idea for the company two years ago. As a member of the board at the University of Washington he worked on a project to extend high-speed intranet and Internet access to off-campus housing.
The school first considered a wired solution from Qwest, but the cost was prohibitive. Another member of the project team was working at Microsoft, which had recently set up a campus-wide WLAN using Cisco Aironet equipment. UW decided to do the same thing, and Lyman ended up involved in the implementation.
"It gave us a very flexible solution for students," he says. "The university could scale it up as large as they wanted. Students could roam on or off campus and have conference calls. And when we looked at the numbers it was cheaper [than the Qwest offering]."
"That," says Lyman, "sparked an idea: that this could be a legitimate company, that we could build out private wireless LANs across the city."
For the past year, Tahoma has been doing just that, targeting education sector and small-medium enterprise (SME) customers in the greater Seattle area. With eight people, including partners Gregg Smith, vice president of sales and marketing, and John Stark, vice president of business development, plus contract installers, Tahoma has built a portfolio of about 10 WLAN installs. Customers range from hospitals to enterprises, with from 10 users to 100.
Tahoma is the only dedicated WLAN integrator in the region, Lyman says. Manufacturers like Cisco do big wireless LAN installs, and some predominantly wired network integrators now have wireless groups, but nobody else in Seattle is doing exactly what Tahoma is doing, he says.
Indeed, there are few models anywhere for such a business. Tahoma has had to learn as it goes. Wi-Fi may represent a wonderful opportunity for entrepreneurs like Lyman and his partners, but it's by no means a slam dunk. The biggest challenge, they say, is just getting the word out to their target market.
"We've found out a couple of interesting things," says Smith. "One is that potential small-medium customers are not as educated about this as we would have thought. They may be aware of wireless, but a lot are not aware it's feasible for them. If they have heard of it, they're probably thinking it's cost prohibitive, or maybe that it's not as secure as it needs to be."
The misconception about price tends to look after itself. Security is a more serious concern. Tahoma offers a VPN-based security overlay on its networks and it's developing additional security functionality.
"Where you get all the bad news about wireless LAN security is with companies that haven't taken into consideration that there are other security layers they could put in place," Stark says. "We really feel strongly that this is what differentiates us. You need those additional layers to make wireless LANs as secure as they can be. It also adds confidence for customers."
Once you get around the legitimate concerns about cost and security, wireless LANs have tremendous appeal for SMEs, Lyman and Smith say. For small growing companies that are often on the move to new offices, WLAN technology makes a lot of sense. It means they don't have to invest in fixed assets they'll later have to abandon. With WLAN equipment, they can take it with them when they go.
Wireless networking is also a good solution if the company is in a building whose construction makes it difficult to pull cable for a wired Ethernet network. Using wireless for bridging between buildings in a campus network can also save enormously on fiber construction costs.
Finally, more and more companies, including SMEs, see a significant benefit in employees being able to stay connected to the Internet or intranet while they move around a building to meetings and conferences.
Tahoma has a two-prong strategy for reaching its target market and getting these messages across. It hand picks top prospects and sends a direct sales force to call on them. For the next tier of prospects, it's using direct mail, outbound telemarketing and, soon, radio spots. "Between those three things, we think we've got a pretty good mechanism for reaching customers," Smith says.
The company is getting ready to step up its marketing effort with near-simultaneous launches in the next two months of a new Web site, and big direct mail and radio campaigns. It will also offer customer seminars soon.
One of the most important ways to get the message across is to let prospective customers actually experience using a WLAN. "Until end users see and feel and touch a wireless network, I think a lot of times they don't really understand what it is or what it can do," Lyman says. "One thing we've noticed is that all our customers, once they start to use [their WLAN] are very satisfied with it."
So Tahoma plans to build a showcase system at its offices later this year. It will not only showcase private WLAN functionality, it will also feature Wi-Fi hotspots in public areas so customers will see how the public and private can work together.
Tahoma has yet to make a move on the public hotspot side, for a couple of reasons. First, it doesn't have enough money to build out the hotspots by itself. The company has been funded to this point by the partners. Now it's doing the rounds, seeking up to $5 million in seed financing from angel investors to pay for the public access infrastructure.
The other reason is that the time is not right. "We don't want to move into the market too early, as MobileStar did," Lyman says.
Venture capitalists, angel investors and manufacturers all say it will start to really take off only at the end of this year, by which time a critical mass of users will have Wi-Fi-enabled laptops and handhelds. Lyman estimates that by then 50 percent of all new laptops shipped will have Wi-Fi networking built in.
The plan is to start with about 10 beta sites. Tahoma envisions a fully built-out network with 200 to 250 hotspots in hotels, restaurants and other locations, Stark says. Subscribers will likely pay about $25 a month for unlimited access.
Synergy between the public hotspot and WLAN integration businesses is crucial to the company's strategy, Lyman says. Tahoma sees employees of WLAN integration customers as its first public access subscribers. In fact, it will offer them discounts on the service to encourage them to participate.
It will also build the first hotspots at sites near WLAN customers -- coffee shops, hotels, conference centers. By pre-selling WLAN customers on the public access service, it will be able to go to hotspot site owners and use this existing base of subscribers as a selling tool.
Hotspot owners, Tahoma believes, will buy in based solely on the traffic-building potential of offering free high-speed connectivity. In fact, the current plan is that the hotspot network will not offer a billing function. The idea is that if you're a coffee shop with a Tahoma hotspot, workers from nearby WLAN-equipped offices will come to you for breaks and impromptu meetings because they know they'll be able to stay connected.
Of course, this is all theory so far. But it's the kind of entrepreneurial theorizing that Wi-Fi encourages.