Intel Investing $150M in Wi-Fi

Intel Monday said it is prepared to spend $150 million in the next two to three years to make sure that Wi-Fi technologies succeed.

Wi-Fi, also called 802.11, is an emerging and increasingly popular technology that provides high-speed wireless Internet access in many locations around the world, including airports, cafes, corporate offices, universities, factories and homes.

The Santa Clara, Calif.-based chip making giant said its has already invested approximately $25 million in more than 10 companies in this space and is expected to increase the remaining $125 million to about 30 different companies, mostly startups in the middle of their Series A or B round of funding. Intel is also looking to fixed line carriers and wireless carriers to advance Wi-Fi. The money would come from Intel’s previously established $500 million Communications Fund.

The company has always been at the forefront of advancing wireless technology. Intel is a board member of the Wi-Fi Alliance (formerly the Wireless Ethernet Compatibility Alliance – or WECA), which has more than 250 company members and has certified nearly 500 802.11 products. Intel also is involved with IEEE, the Bluetooth Special Interest Group and the HomeRF Working Group.

Intel is currently in the throes of developing its first wireless-specific semiconductor, codenamed Banias. When it is released in the first half of next year, the chip will include dual band – 802.11b and faster 802.11a – wireless capability as a standard part of combined chipset and processor technology. Currently, Intel sells 802.11a and 802.11b wireless networking access points, adapter cards and software.

One area that Intel said it sees less emphasis is in 802.11g, which applies to applies to wireless LANs and provides 20+ Mbps in the 2.4 GHz band. The company said by the time the standard completes its approval process with the standards bodies, it could become obsolete.

Intel said its vision for Banias chips is selected mostly for laptops and other portable computers.

“Our estimates show that it could grow to 30 million laptops equipped with Wi-Fi capability in three years,” said Intel Executive Vice President and Intel Capital president Les Vadasz. “It will fundamentally change the way people use technology and enable high-speed Internet access anytime, anywhere for business and consumer use.”

Another driving force in developing Wi-Fi is the emergence of the commercial hotspots. Hotspots, like those offered by Starbucks , differs from NANs in that commercial hotspots have a reach of just 300 feet – enough to lure tech-savvy customers in to a restaurant, coffee house or airport. NANs have a wider reach.

High-tech marketing research firm In-Stat/MDR predicts the marketplace will expand from 2,000 locations in 2001 to 42,000 sites worldwide by 2006.

One company that Intel would not work well with is T-Mobile International, the wireless subsidiary of German-based Deutsche Telekom that worked with Starbucks to put wireless access with T1 speeds in some of its U.S. and European stores.

“We did not like their ‘walled garden’ approach,” said Intel vice president and general manager of the Network Communications Group Mark Christiansen.

But the specific infusion of money so highly targeted to younger companies is not likely to lead to an influx of mergers or acquisitions, company officials said.

“We rarely acquire companies that we invest in,” said Sriram Viswanathan, Managing Director of Strategic Investments for Intel Capital. “In the last 10 years or so, Intel has only acquired between five to ten companies. What we are looking for with the investments is to spread it out 50-50 between Series A and B companies.

In addition to Wi-Fi, Intel’s R&D labs are currently developing Intelligent Roaming software technology to make it easy for portable devices to go from network to network seamlessly, without any user intervention. The company’s researchers are also developing “smart radio” technologies that could be integrated into Intel chips and would be able to “sniff out” wireless networks and connect to them automatically. To that end, Intel awarded more than $1.2 million in grants to help five universities set up laboratories and curriculum to study wireless technology. Carnegie Mellon University, the Indian Institute of Technology in Madras, India, Rutgers University, University of California at Los Angeles and Virginia Tech received grants.

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