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.
