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The Wireless Year: Bad and Getting Worse

The year 2001 was a bad one for the wireless industry as consumers and the enterprise refused to embrace wireless Net access and wireless companies both large and small struggled to stay afloat. Now for the bad news: the Yankee Group says things will continue to be bleak for much of the coming year.

In a year-end review of the wireless industry, the research and consulting firm said that the difficult times for wireless companies will continue, although things should start improving by the end of 2002. However, as bad as things were, the wireless industry still took some significant steps forward, the Yankee Group said.

Most notably, 2001 marked the broad expansion of next-generation wireless networks that provide significantly faster data access via wireless devices, the Yankee Group noted. Specifically, CDMA-related next-generation technologies started to be launched in Europe and GSM-based GPRS services were launched in Europe and North America.

That trend will gather even more momentum in 2002, according to The Yankee Group as competition between the two technologies increases, particularly in North America. It noted, for instance, that although GPRS systems are starting to roll out in North America from operators such as AT&T Wireless, Sprint PCS will launch its cdma2000-based wireless service in North America by mid-2002.

"If the CDMA operators can succeed in providing exciting new applications and data services, they will place their GPRS-oriented competitors on the defensive," said David Berndt, director of the Yankee Group's wireless and mobile technologies practice.

However, the contraction in the number of mobile phone vendors will continue in the next year. The Yankee Group noted that a variety of vendors, including Mitsubishi and Philips, pulled out of the North American market and Ericsson and Sony, which both were struggling, combined their handset operations to create a new company.

"The wireless phone market has too many competitors," Berndt said. "(The year) 2002 will witness more market exits or partnerships. We've also seen too many handset problems. In an effort to launch phones ahead of their competitors, quality control corners have been cut resulting in subsequent recalls".

In order to survive the next year, wireless companies will have to be fast on their feet and respond precisely to the needs of the market, the study said.

David Haskin is managing editor of allNetDevices.com.