Meet Selina Lo, Wi-Fi billionaire.
Okay, we don’t actually know where Lo ranks on the list of the world’s richest people, but her bio at the Ruckus Wireless Website—Lo is the company’s president and CEO—says she sold the first entrepreneurial venture she was involved in, Alteon WebSystems, for $7.8 billion, to Nortel.
Now Lo is at the helm of a Wi-Fi company with an impressive, if short, history, and by all indications a very bright future. Founded in June 2004 by Bill Kish, its CTO, and Victor Shtrom, Ruckus is backed, to the tune of $40 million, by heavyweight investors, such as Sequoia Capital and Motorola Ventures. It’s here for the duration.
The company sells its Smart Wi-Fi products around the world—over a million units to date. They feature a high-gain directional antenna system that uses patented software-based beamforming (BeamFlex) and quality of service (QoS) technologies to extend range. Ruckus claims it can deliver two to three times the coverage of competing products at very low cost.
Lo, a marketing visionary, is also known as a straight shooter who doesn’t duck controversy. That’s the way she comes across on the phone: smart, articulate, opinionated. Our conversation ranged from the economy to Wi-Fi’s role in an increasingly crowded wireless landscape to the future of that much maligned phenomenon: muni-Wi-Fi.
On the recession
The deepening recession hasn’t started to pinch Ruckus—yet. The two markets the company targets are service providers and mid-tier enterprises. The impact is mostly being felt on the enterprise side, Lo says.
“Any spending that is discretionary has been cut back. So it depends on the attitude of the particular company, whether they look at Wi-Fi as a discretionary part of the IT infrastructure, or whether it’s a must-have.”
On the positive side, Wi-Fi is increasingly becoming a must-have, Lo says. “The trend is definitely moving to Wi-Fi as the primary network medium. You may see some companies not doing any new cabling now. And over the next ten years, I think Wi-Fi could evolve to become the only network.”
The service provider segment, Ruckus’s traditional sweet spot—the company started off selling in-home Wi-Fi video distribution systems to IPTV providers—is “pretty stable.” Lo adds, however, that companies are being a little cautious about depleting stock of Wi-Fi product first before buying more.
The recessionary impact also depends on geography. “We’ve definitely seen that the enterprise business in Europe has been severely impacted by this economy.” North America has been less affected, while Asia remains “quite vibrant.”
Ruckus recently announced that its new ZoneFlex 802.11n Smart Wireless LAN products were selected by AirMedia Inc., a Chinese service provider, for use in a digital advertising network in over 50 airports in China. Ruckus also supplies Hong Kong mobile provider PCCW with ZoneFlex products to light up thousands of hotspots.
“In terms of the mid-tier enterprise, yes, we’re seeing some impact,” Lo says. “But it’s not disastrous, and it’s more than made up for by our service provider activities.”
On growth markets
Where will the industry—and where will Ruckus—see its growth coming from in the future? Despite the short- to medium-term pain in the enterprise market, Lo believes the mid-tier segment will deliver significant growth for Wi-Fi equipment providers.
Most of the Wi-Fi penetration in the enterprise has been at the top end, Fortune 1000 companies, she says. In the next tier—Lo calls them “the unfortunate 50,000”—Wi-Fi has seen spotty use, often nothing more than an access point in the lobby.
“Basically the mid-size enterprise is just starting to deploy Wi-Fi now. And we are seeing a lot of uptick in enterprises, such as hotels.”
Hotels? Surely hotels were among the first to adopt Wi-Fi?
Maybe, but many still don’t have it throughout their facilities, she says. And with the proliferation of Wi-Fi-powered BlackBerries, iPhones, and other mobile devices, hotels are increasingly under pressure from customers to provide wireless access.
“Wi-Fi is the number three requirement when people start looking at booking hotels,” Lo says. “So we are seeing significant growth there.”
The other growth segment? Surprise—service providers, Ruckus’s other main target market. But demand there is changing. Now service providers are apt to want Wi-Fi for hotspots and public access. Which leads to another topic of discussion.
On the death and rebirth of muni-Wi-Fi
Lo agrees that failed muni-Wi-Fi projects gave the industry a black eye. The problems, she says, were three: the wrong business case, the wrong technology, and poorly thought out implementations.
That was yesterday, though. “Actually, we are now starting to see a reemergence of that market—but in a whole different form, or several different forms.”
The biggest problem with the business cases for first-generation muni-Wi-Fi projects was that Wi-Fi access was the whole point, she says. Now service providers in other sectors—mobile telephony, pay TV—are using metro-wide wireless as part of a larger strategy.
Some want to increase subscriber “stickiness,” as well as attract new subscribers by offering a free wireless extension to home or business services. A number of cable companies have worked with WiMAX provider Clearwire to do this. But Cablevision in the New York area committed $300 million to building a Wi-Fi public access network across its entire coverage area.
“They’re able to hold on to their subscribers and gain new ones,” Lo says. She quotes recently heard figures suggesting that 70% of recent Cablevision subscriber growth has come from its metro Wi-Fi users.
“And when they gain a subscriber,” she points out, “it is not just a subscriber to their muni-Wi-Fi. Maybe it’s a subscriber who will also move their broadband service, as well as their cable TV service to Cablevision.”
“That strategy has been receiving a lot of kudos, and now other cable operators are doing trials to see if it might work for them.”
On Wi-Fi’s role in the larger wireless universe
Mobile service providers, meanwhile—such as PCCW in Hong Kong—are using Wi-Fi to deliver public access as a way to reduce data traffic on their expensive 3G networks.
“Hong Kong users are very sophisticated,” Lo says. “They’re constantly on the Internet. So PCCW needed to off-load some of that traffic. They’re doing it by putting Wi-Fi everywhere, even in old telephone booths. Those are Ruckus.”
The company has 5,000 hotspots so far.
“Subscribers are using Ruckus when they’re not moving. Voice calls are all on the mobile network, but if there’s a good signal available, data calls use Wi-Fi.”
Wi-Fi is being used in similar ways in developing markets, such as India, where government regulators have yet to clear the way for mobile WiMAX services like Clearwire’s Xohm, and China, which recently licensed 3G providers.
Chinese operators, she says, are contemplating what they call a c+w strategy—CDMA plus Wi-Fi.
“It’s [Wi-Fi] becoming the wild card technology—to plug all holes that have to do with wireless broadband,” Lo says.
On Wi-Fi versus WiMAX
But surely WiMAX is or will be a better bet to play the wireless hole-plugging role? Lo isn’t convinced. Not surprising, perhaps, given her company is committed to Wi-Fi, but what she says echoes what others are saying and makes some sense.
“I think the WiMAX investment is certainly much bigger [to build] an infrastructure. That’s one thing. And secondly: end points. Look at the number of iPhones, and how much users like using Wi-Fi for accessing the Net [with them]. And look at the number of phones that have Wi-Fi built in versus [the number with] WiMAX.”
In the “open market,” Lo says, it’s a question of which technology has the ecosystem in place to move forward and support this type of use.
“The ecosystem is ready now for Wi-Fi. For WiMAX, it’s just starting to gel—just when the whole [economic downturn] happened. So it’s not even clear that WiMAX will ever become a prevalent, mainstream technology.”
On Wi-Fi versus Femtocells
Femtocells, another technology that could usurp potential roles for Wi-Fi in the wireless world, are a different story.
“If you’re a cellular carrier, femtocells are a dream come true,” Lo says. “They can use the same technology [i.e. GSM or CDMA], but cover every corner inside. I think it’s something that will happen just because the technology has so much carrier support.”
Femtocells definitely have a role to play in bringing mobile voice inside, she says, but as carriers such as PCCW in Hong Kong already understand, data is another matter. Flat-rate data plans, needed to attract a mass market to 3G, will cause overloading both at point of access and in backhaul, and that will mean bad performance, Lo says.
“I believe in the end, the service providers cannot afford to let people throw everything on 3G or 4G. They’re not going to be able to support the amount traffic it will generate.”
Enter, again, Wi-Fi. And Ruckus.
Gerry Blackwell is a veteran technology journalist and frequent contributor to Wi-Fi Planet.