Microsoft Is Bullish On Wi-Fi

Microsoft said Thursday that it would soon begin making
home networking products, marking a significant bet by the software giant
that wireless local area networks (LANs) are poised for a mainstream takeoff.

The Redmond, Wash., company, said it will begin to sell a line of hardware
products to enable customers to build home networks with 802.11b technology, or Wi-Fi .

“These products will enable consumers to set up a wireless network quickly
and easily so they can share their broadband Internet connections, files and
printers with other computers in their home or small office,” Randy Ringer,
general manager for Microsoft’s hardware division, said in a statement.

Ringer said Microsoft could move Wi-Fi beyond the early-adopter phase and
into the mainstream with simplified setup and maintenance. Microsoft has been reticent to provide greater details about the products, and Ringer said the outfit
would reveal details of the products this fall.

“It’s kind of an interesting move on Microsoft’s part,” said Joe Laszlo, an
analyst with Jupiter Research. “You think of them as a software and
services company, not a hardware company.”

Microsoft’s move is an endorsement of the growing popularity of Wi-Fi, which
has established a foothold as the wireless networking standard. The
company’s Window XP operating system already
supports 802.11b
, and Microsoft announced plans in January to roll out a
wireless portable monitor with Wi-Fi technology.

802.11b chipsets transmit data signals at 11 Mbps through an unlicensed
portion of the spectrum at about 2.4Ghz, sharing the space with low-power
signals from home electronics like cordless phones, microwaves, and
garage-door openers. Wi-Fi has a range of about 100 meters from an AP to an
enabled device.

Allied Business Intelligence, a telecom and networking researcher, estimates
in 2001 16 million people used Wi-Fi; in 2006 it expects 60 million will.
Public awareness of Wi-Fi’s potential has been driven by the proliferation of public hotspots,
which IDC pegs currently at 3,000 and expects to hit 40,000 nationwide in
2006.

Navin Sabharwal, an analyst with Allied Business Intelligence, said the move
by Microsoft was likely more intended to push along 802.11 adoption, rather
than make a full-scale push to be a player in making 802.11 hardware, which
he described as a low-margin business.

“Microsoft has a history introducing products into categories to push the
market along,” he said.

Kurt Scherf, an analyst with Parks Associates, a wireless consultancy,
agreed that Microsoft could push 802.11 adoption in the home, which he has
called Wi-Fi’s “final frontier.”

“They are the biggest name in the industry and to have them to enter into
the hardware and software [market] is a huge benefit to the wireless
industry,” he said.

Parks Associates projects wireless LANs will take off in the home, with both
PC-to-PC data networks and a proliferation of streaming video and audio
entertainment networks. By 2006, Parks forecasts one in five U.S. households
will have a data network, quadrupling today’s number. On the entertainment
side, Parks estimates U.S. households will have 125 million products connected via wireless networks.

“The way I look at the home-networking market what Microsoft is doing makes
a lot of sense,” Scherf said. “They got into the entertainment side of
things in a big way with the release of the Xbox. Bringing home networking
to more and more households means more computer sales.”

Laszlo said he would be interested in seeing how Microsoft ties its new
offerings to its MSN service. “I would expect some creative bundling deals
there,” he said.

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