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Wi-Fi Spreading Fast But Lacks Profits
clapton_fan writes "The New York Times has a story that details the spread of wireless networks but says the concept has been short on profits thus far. Its growth is mainly attributable to homes and small businesses. Corporations are reluctant to embrace them because of security concerns.
Meanwhile, Intel is planning to have every device that uses an Intel chip Wi-Fi enabled which will make it difficult for companies that sell Wi-Fi as an accessory to prosper."
Wi-Fi Internet Access Is Hot, but Its Profit Potential Is Tepid
By BARNABY J. FEDER
With the Wi-Fi wireless Internet access standard becoming a bandwagon that even big players like AT&T, I.B.M. and Intel are joining, equipment companies big and small are hoping to ride along. But many industry analysts say it could be hard to make money in Wi-Fi, which is unlikely to represent more than a tiny fraction of the overall telecommunications equipment market for at least several years.
Many of the early leaders in Wi-Fi are obscure companies like Proxim, Buffalo, Linksys and Dlink. And those that do not sell gear directly to consumers must rely on selling to Wi-Fi service providers that are themselves start-ups still trying to find their way, companies like Boingo Wireless, HereUAre Communications, FatPort and Surf and Sip. The service providers set up "hot spots" at places like airport lounges or Starbucks coffee shops, where anyone with a laptop computer or other device equipped for Wi-Fi can go online.
While analysts hesitate to predict that any of these companies will survive to become widely recognized brands like Netscape, the resemblance to the Internet craze of the 1990's has been widely noted.
"There is a bit of a bubble here," said Dylan Brooks, a wireless communications analyst at Jupiter Research. "We've had more than $2 billion in venture capital money flowing in, more than total revenues."
Most of those ventures are destined to flop, analysts say. Even established technology companies -- like Cisco Systems, the leading seller of Wi-Fi gear; Symbol Technologies; and the Hewlett-Packard Company -- face an uphill battle to earn profits with Wi-Fi because competition is driving prices down so rapidly.
Meanwhile, specialty chip makers like Intersil, Broadcom and Agere have been facing growing competition in the Wi-Fi market from their counterparts in Asia. And with Intel leading the charge to make Wi-Fi part of every device that carries an Intel processor, business may be tough for companies like Intermec Technologies and Linksys, which have been making some of their money from Wi-Fi adapter cards sold separately to computer owners.
With prices of Wi-Fi chips and networking equipment plummeting even as unit sales are soaring, the industry's revenues are not expected to top $3 billion -- 1 percent of the worldwide market for telecommunications equipment -- before 2006, according to Synergy Research.
Wi-Fi received perhaps its biggest publicity push yet when Cometa Networks, a new company whose backers include Intel, AT&T and International Business Machines, said last week that it would roll out a nationwide wireless network for Internet access based on Wi-Fi.
The term Wi-Fi is shorthand for wireless fidelity. Wi-Fi covers a set of design rules formally known as 802.11, which were developed by the Institute of Electrical and Electronics Engineers, a nonprofit group.
The 802.11 standards differ from another fast-growing new wireless standard called Bluetooth in that they are best suited for transmitting data over distances of up to a few hundred feet instead of just a few feet. The most popular Wi-Fi variant at the moment, 802.11b, is also much faster than Bluetooth, operating at up to 11 million bits per second -- or about eight times the speed of D.S.L. and cable modems. Still reading this lame post? Get a life and go read it yourself. But today's Wi-Fi chips are power-hungry, making them less practical for small devices like hand-held computers or cellphones.
It seems that Cometa networks, formed by tech giants AT&T, Intel, and IBM, will be the company to turn nationwide Wi-Fi into a reality. They plan on unrolling 20,000 access points across the top 50 U.S. metropolitan areas in two years. The service will be sold wholesale, and it's estimated that consumers will be able to access the network for between $10-$20 per month. The Times article mentions Cometa, but this Wireless NewsFactor article goes into more detail. And of course there is the company's own website as well.
Rather, some hysterical idiot took one quote out of context, embelished it, and then slashdot published it on the front page as fact.
The government never said anything like that.
autopr0n is like, down and stuff.