RealTime IT News

Heavyweights Pump Up Wi-Fi

While it began as the playground of scruffy technology buffs, stringing together free community networks in tech havens like Seattle and San Francisco, the booming 802.11 industry garnered the attention of the biggest names in tech and wireless this week

Monday's announcement by Microsoft that it would roll out an array of 802.11 products was short on details. The company talked fuzzily about a "new line of wireless broadband networking products," but the fact that Microsoft is interested in getting involved in the low-margin hardware industry led some industry analysts to conclude Microsoft wants to drive 802.11 adoption.

Just a day later, word leaked that Intel, IBM, some Internet service providers (ISPs), and a bevy of wireless carriers are mulling the creation of a joint nationwide wireless service that would tie together the hodgepodge of 802.11 service areas.

"When you have Intel, Microsoft and IBM making strong statements, clearly it's going to have a significant impact on market penetration," says Allied Business Intelligence analyst Navin Sabharwal. "It invariably attracts other companies, too. More players means more innovation, lower prices and higher consumer adoption."

Microsoft's Muscle

Microsoft's move could signal an important endorsement of the growing popularity of 802.11b, or Wi-Fi, which has established a foothold as the near-term wireless-networking standard. Right now, most wireless LANs use 802.11b, which transmits data at 11 Mbps through an unlicensed portion of the spectrum at about 2.4 Ghz, sharing the space with low-power signals from home electronics devices. Wi-Fi has a range of about 100 meters from an access point (AP) to an enabled device.

Parks Associates, a wireless consultancy, sees home networking as a key growth area for Wi-Fi, as households link up computers, printers, and multimedia devices to share broadband wirelessly. By 2006, Parks Associates forecasts one in five U.S. households will have a data network, quadrupling today's number, with 125 million products connected through wireless networks.

Already, Microsoft's Window XP operating system supports Wi-Fi, and in January Microsoft announced plans to make a wireless portable monitor that uses WiFi technology to link to the terminal and keyboard.

Russ Craig, an analyst with the Aberdeen Group, says Microsoft, despite some hiccups with the Xbox and Internet TV, has chosen to avoid the crowded field for enterprise wireless LANS in favor of the consumer market.

"Microsoft has had mixed luck with its hardware offerings," he says. "I think its announcement that it will provide gear is fairly consistent with its strategy to become more of a presence in the home."

Also this week, Microsoft unveiled a further plank in its home-entertainment strategy, announcing the Christmas rollout of its Windows XP Media Center.

Microsoft said it would not reveal until the fall what kind of products it will roll out, but its offerings will face stiff competition from early entrants into the space, including well-established leaders like Cisco Systems, Linksys and Netgear.

"If you really read into what they talk about, they're talking about doing hardware, but the comments allude to providing not just an access point, but an access point that would double up as a home multimedia server," Sabharwal said. "The more you read into it, it ties more into their home-entertainment strategy."

What Will the Carriers Do?

While Microsoft concentrated on the home front, Intel, IBM and the wireless carriers began to tentatively explore the huge task of creating a nationwide network of commercial wireless LANs, or hotspots, under the codename "Project Rainbow." As it is now, the public hotspot market is fragmented, with wireless LANs interspersed around cities, in coffee shops, airport waiting areas, and hotel lobbies.

Intel and IBM already cast big shadows in the market. Intel is keen to pump out the Wi-Fi chipsets that could be included in a raft of wireless devices. According to Gartner Dataquest, 45 million 802.11 chipsets will ship in 2005. Intel has reportedly poured hundreds of million dollars in Wi-Fi research and development, in the hopes of opening new growth avenues to make up for the mature PC chip sector. In order to keep churning out chips, though, Intel needs wireless LANs to achieve some degree of ubiquity.

Meanwhile, IBM has become a leader in constructing wireless LANs, using its unrivaled size to capture market share through its global services division. IDC estimates spending on wireless LAN equipment will reach $3.7 billion by 2006.

The key to the Intel-led Project Rainbow might be getting the carriers on board, since the project would reportedly weave 3G cell-phone networks with Wi-Fi, theoretically allowing users to move from higher-speed wireless LANs to more ubiquitous 3G networks.

This would be a huge step forward for the carriers. Craig says that, unlike their brethren in Europe and Asia, U.S. wireless carriers have been slow to embrace 802.11, warily eyeing it as a potential competitor to 3G.

"It's become a general realization that this is not the Evil Empire," Craig says. "It's a useful adjunct to the 2.5 and 3G offerings that they are counting on to drive so much revenue that they're able to pay for their licenses."

Project Rainbow, Sabharwal points out, is still in a very early stage of development, and the companies involved are not publicly commenting on their plans. However, faced with stagnating growth and the continued delay of 3G adoption, wireless carriers have an incentive to seriously explore Wi-Fi.

Already some have made moves in the space. In November 2001, VoiceStream scoop ed up MobileStar's network of hotspots, including over 500 Starbucks locations. Sprint PCs has also dipped its toes in the water, investing an undisclosed sum in EarthLink founder Sky Dayton's hotspot aggregator Boingo, which launc hed a national hotspot network in January.

"If you look at the carriers, they have a very clear problem," Sabharwal says. "[U.S. subscribers are] still growing, but it's slowing. These guys are worried about how to drive up revenue in the future."