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How Much is Riding on Wi-Fi?
nexex writes "The Seattle Post-Intelligencer's John Cook explores the current flood of money on wireless networking startups and if they could be heading towards another dotcom bubble. Interesting tidbits include, ;More than 60 Wi-Fi start-ups have raised more than $650 million in the past two years, according to VentureWire. Last quarter, there was more money invested into wireless technologies than networking and enterprise software.'" The article's got some good commentary on grassroots-founded tech trends vs. investment-backed tech trends, and tries to explain why wi-fi has caught on so well.
What's with these bozos taking a free public resource, blocking it off, and attempting to profit from it? It might be different if they had purchased the bandwidth at auction, like cell carriers and television stations, but with effectively three channels available for 802.11b, it's a significant hit to personal use when you have these companies come in and set up shop.
funny munging
Comparing this to the dot com bubble is not really a very good comparison. No one really needed thousands of websites which attempted to sell you services that you could get from any high street shop. But I can see genuine uses for wireless technology which means that it is worth investing in.
shouldn't it work better? My new Linksys cards didn't even work from one side of my house to the other until I put a directional antenna on the server end. A $100 antenna to get across 40' horizontal and 10' vertical is ridiculous. (aside: my coffee can directional antenna worked fine, but my wife said no so I had to buy a Yagi) At work, we're running new NetGear cards with the newest driver, orinoco-0.13a. We're still seeing 0.85% long-term packet loss. That's with ping running in the background sending 1400 byte long packets each minute averaged over the past month. The computers are only 40' apart. After buying 8 dBi omni antennas for each end, the packet loss was much better, but it's still significant. Those omni's are expensive (about $100) and the cabling is expensive (about $75), so it's disappointing to see it not work very well.
The dot com bubble was caused by a sharp cutback in interest rates, too much loose capital, and an obsessive delusion that economic wealth centers arround intellectual property instead of service and need. The first two have taken care of themselves, if they've gotten over the third, then things will be fine.
I've dealt with several wireless startups in my career. I feel the analogy of the dot-com bubble is quite accurate. Let me explain why...
One of the more prominent start-ups involved in building gear was requesting an ASIC (application-specific IC) engagement from my company to implement some of their functionality. They were asking about how fast we could run a certain type of embedded processor in one of our processes technologies. Keep in mind that these are guys with supposedly years of ASIC and system-building experience. When I turned the question around to them that it was more relevant for us to provide a solution with a certain amount of floating point performance, MIPS, multiply-accumulates per second, I/D cache size, etc., they kept saying that they weren't sure, but that clock speed was paramount. Yeah, right...
To top it off, they wouldn't give us any details of their end application. Was it 802.11a/b/g? 802.16? On-board multipath antenna signal processing? They also said if we asked too many questions we'd be out of the running for an ASIC bid. In other words, there was little substance to what they were dealing with. Yet, they were supposedly one of the most promising companies out there.
Then I took a stroll through the Bluetooh forum a few months ago in San Jose, CA. I saw a lot of folks involved in wireless IP not just for Bluetooth but for 802.11. Based on this, and my experiences with companies as described above, my verdict on wireless is as follows:
1. There are too many players who don't know what they are really doing, and who have no focused strategy. They're just getting into wireless because it is the industry's newest buzzword. That's at all levels of the value chain (semiconductors, box builders, and service providers).
2. There are far far too many players in the semiconductor aspect of wireless. From soft/hard IP providers to chipsets, it's a confusing soup whose interoperability is unconfirmed, and who are jockeying for position on issues such as range, power consumption, and how integrated they are (both from the baseband+PHY perspective and from the driver/software stack perspective). In some cases, the IP hasn't been tested or even implemented in an FPGA, yet they're on the show floor peddling their wares. There'll be a major shake-up in this area not only because of oversaturation of players, but because of oversaturation of silicon suppliers, where profit margins of the manufacturers are being pushed almost endlessly downwards due to overcapacity in semiconductor manufacturing and desperation of some companies to stay in business. Most of these players should disappear and leave us with hopefully two or three good standard chipsets per major standard group. Those looking at integreated wireless ASICs with PHY are only dreaming for the next several years.
3. In the system arena (commercial/residential wireless APs, repeaters), everyone is jumping on the bandwagon. Yet, as shown by the company I described above, there is a headlong march to get these products out without looking at some of the fundamentals such as interoperability. Heck, I had a friend yesterday whose Linksys PC card wouldn't link to her Netgear AP. That's a tiny example, but we could potentially be facing some of this type of problem.
4. In the service provider arena, there are some revenue opportunities. The end market, however, needs to have greater uptake of compatible wireless gear. That's going to be very difficult. There's only a limited amount of bandwidth available in the already-crowded space. For example, 2.4GHz is for 802.11b/g, and that's already crowded with devices from cordless phones to microwave ovens that could be potential sources of interference. If wireless is to be successful commercially, as a service, I think we'll either have to piggy-back on the 3G networks, or set up a standard that doesn't use frequencies fully opened up by the FCC. Of course, you know what that could mean (the big fis
Wireless was heavily hyped toward the end of the dot-com bubble. We were all supposed to browse html sites on 1x2 inch mobile phone screens. Or we were supposed to lug around large laptops.
But things have really changed with the arrival of high performing wireless PDAs. An adequate screen that can handle html. Further, browser technology has improved to the point where the browser will actually simplify the html for you.
The next step is to go beyond content provision in presentation-dependent formats (e.g., get away from sites designed in purely html, wml, etc). Some might have thought this a pipe dream just a few years ago, but that too is already happening. Look at blogs with rss feeds and various sites with rss content syndication. Individuals and non-profits are already taking advantage of these media. It is something that looks much like the early stages of html.
The issue will be corporate participation. The minute you provide your feed in a presentation neutral (read non-proprietary) fromat, how do you retain control? This will inhibit many corporations.
However, the good news is that there will be plenty of free service providers, likely enough to achieve the tipping point.
... if the media would keep out of things they don't understand.
I'm convinced that the media played a huge and extremely irresponsible roll during the dotcom boom and bust.
They fuelled things up out of all proportion, attempting to report on technologies that they didn't understand one iota.
You watch if Google goes for an IPO. The tech media will go absolutely f****** crazy. Tech journalists will reach blood pressure levels bordering on fatal. And the worst thing is, it will not just be themselves that they kill. It will be Google.
I sincerely hope the media will cover the next "big thing" responsibly - with a cool, calm and collected head.
There may be some lemons getting invested because of WiFi but this is not a bubble or something that will affect the overall health of the market. $650 million dollars is probably equivalent to what VC's invested in online pet food stores from 98-00.
A good amount of the short-term success of wireless networking is largely going to depend on WPA or "Wi-Fi Protected Access". This is the new version of encryption which should hit devices this summer and will be taking over for WEP.
This method of encryption supposedly covers all of the encryption holes and exploits available for WEP, using a series of revolving encryption keys.
While wireless networking is already very popular in thousands of homes and many small businesses as well, the real money in computers is in medium and large businesses. With encryption that actually works (assuming it does), the viability of using wireless networks in almost any setting becomes real.
Is wireless networking going to take over the world? No, but it's mainstream now and it's not going away for a long time, which is fine by me. I'm a Senior Wireless Networking Technician at Dell, job security = good.
Craenor
Its also putting a nail into the 3G telco spending boom coffin. These telco's are freaking out, they paid BILLIONS for 3G licenses and now a disruptive technology has emerged that threatens to make those investments nearly useless in the short to mid-term which is all the market cares about in these troubled times.
In Europe the big 3G telco license owners are frantically trying to find a way to either control the genie or put it back in the bottle. It will be interesting to see what occurs.