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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.
I say it busts. I dont know that it has proliferated enough to be of enough interest that should have generated that type of investment.
I guess what I am saying is, I consider myself a geek of new technologies and Im too cheap to shell out $19-50.00 a/month of Wifi Access at hotspots.
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
I work for one of these startups (we work on technology that enhances the co-existence of IEEE 802.11b and Bluetooth) and we were basically privately funded. First by the founders themselves and then by some of their close contacts.
The tech bubble affected these wireless companies too. Most VC firms were not interested (or didn't have the money to invest in) wireless technology firms. Certainly the big money for growth was NOT there, and dealing with these constraints was necessary. This company did try for financing from a number of sources and was unable to obtain any VC funding of any sort.
Wireless is here to stay because I think most of these wireless technology companies that have been built during the "bust" and have had to learn to be profitable and have low burn rates in order to survive. This has allowed better structured companies to exist.
Another one of the companies that I consult for is totally privately funded from a profitable operating company. This has created a situation that is sustainable for the long term without external financing. There is no "bubble" here. Wireless technology companies are here to stay.
These are the good old days you'll be telling your children about. Make them worthwhile.
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.
... not for home or office wireless. It's just too easy now to buy a nice, cheap little setup to free your laptop from a desk.
...it'll only be to the extent for those startup's that didn't have a good revenue model figured out in the first place.
You think Starbucks is putting in wireless from the goodness of their heart? Bzzz...wrong answer... they'll sell more coffee...probably a LOT more.
If this blows up, it's not going to be to the extent of the fantasy dot-com boom that started with Netscape and finally died out in early 2000, and is responsible for this economy....
In the world of audio, High Fidelity means closely approaching the nature of the original sound source.
What the hell does Wireless Fidelity mean? Prevention of adultery through remote control? Some kind of 802.11b connected chastity belt?
Perhaps means closely approaching the nature of the Ethernet medium. If so, it's an outright lie. There is no similarity.
I don't like the term Wi-Fi. I encourage others not to use it. It's vague and stupid and I wish it didn't exist.
Yours Sincerely, Michael.
Cause I just noticed that local used office equiment store is running low on inventory.
This space for rent.
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
But that doesn't necessarily mean 802.11b, however. Ultimately though, computers are going to continue to shrink and converge with such devices as mobile phones. Data transfer and communications are going to be fundamental to such devices.
Now, whether 802.11 or its descendants are going to be the facilitators, or whether it's satellite; or maybe even a combination of both, wireless technology will be the future. In my mind, the fusion of short range and long range makes sense; satellites are useless indoors or in cities with skyscrapers or underground in facilities like subways or busses. 802 is perfect for this. On the other hand, 802 has a very limited range; you drive from Washington to NY, you still want to be able to get your mail. Satellite slips in.
Either way, wireless technology is going to continue to play an increasing role in our lives. People are insisting upon staying connected with the rest of the world no matter where they are, and connectivity without wires facilitiates this.
-- james
The article only talks about venture capital firms, but I would guess they're in the minority compared to the individuals (like me) who have bought stock in various wireless companies. There are billions invested.
Personally, I'm not going to get excited about wireless networking until it is availably globally. Here in rural Pennsylvania, it's hard enough to even get broadband. Isn't the whole point of wireless that you are connected wherever you are?
"and tries to explain why wi-fi has caught on so well"...
How about: the same reason why the GUI, the mouse, the floppy drive, USB and heaven knows how many other standards have caught on so well in the PC markets:
Apple.
They pushed it. Note: I'm not saying they developed it; but there's a big difference between some geek sitting in his basement with a really cool tech, and getting the entire world to use it. Apple is the link between the two in this case.
yep, I'm gonna get marked as a troll or overrated for this, but I got karma to burn.
-- james
that there is a wireless bubble right now.
Wireless is sexy and sci-fi. But it's also getting pushed hard right now, when it can't deliver the quality of wireless networking that people in the general public have in their heads. You guys better get caught up fast, or there's going to be some dissilusionment and a wireless bust and a few companies are going to have to die.
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.
This is old news.. i've been watching wireless for a while, and the business model sucks ass till you invest billions to control whole population areas, so people could effectively use the wireless anywhere in their area, so your broadband becomes your wirless connection.. One ISP provider gives it all to you.
There has already been a company that went under trying to do wifi setups, look at metrocom or what ever that pole top wireless was out in Cali.. they went under, as with the company that was to provide the wireless to Starbucks, they were stupid though, trying to put a T1 to every location to feed these AP's, when you could use a 3mb dsl for 1/10th the cost. That company already went under and was taken over by someone else with the same idea.
Someone related wireless to be similar to fax machines.. It was either Fedex or UPS that spent millions outfitting locations with faxes, so that anyone could send a document around the world same day.. they didn't realize that the fax network was going to build it's self, people would buy low cost fax machines and send their documents themselves for pennies instead of spending dollars at the delivery company. Wifi is sort of like this.. unless they up the power for providers or something the range sucks ass, you would need cells of wifi that cover area like phone signals..which doesn't seem to happen. You think that cell phone coverage sucks.. imagine needing a wifi tower like ever 300 ft.. not going to happen.
Interestingly enough, the article makes "WiFi" sound like a local/regional phenomenon. Sure, it's a Seattle publication, but it makes one wonder. After all, wireless networking clearly depends on the network effect and the ranges are still short enough that the technology's better suited for high population densities. And even then, you need a concentration of mobile users.
Personally, I've been waiting for 802.11* to take off "globally" before buying a card. And I might have to wait.
I'm a Montrealer now living in Atlantic Canada. Never been to Seattle or anywhere on the North American West Coast.
There are interesting 802.11 projects in Montreal (including pilot programs in universities and phone booths) but even that seems fairly limited.
Alexandre http://enkerli.wordpress.com/
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
You won't make money if people don't want to pay for what you're bringing to the table, no matter how "cool" it is. And if it costs you more to deliver your product or service than people are willing to pay, then you still lose.
The VC community is such an amazing bunch of lemmings. I've been involved in several roundtable discussions with VCs, and one thing I took away from those meetings is that VCs rarely go against the grain. It's a hive mind.
So they've decided that WiFi is cool technology that will become ubiquitous in some fashion or another. They've therefore opted to invest in companies that offer WiFi products and services. But how many of these companies actually know how to turn a profit? How many of them have a bona-fide business plan that goes beyond, "get WiFi out to the masses and hope we somehow make money off it."
In the mean time, VCs are shutting out a lot of good ideas that don't have the "sexiness" (I'm serious, a lot of VCs actually talk like that) of WiFi. To paraphrase Jack Nicholson, "this VC system needs an enema!"
Read the EFF's Fair Use FAQ
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.
Intel's coalition developed it, and helped to push it, but the real kick-in-the-pants to the USB standard was the iMac. Suddenly, there was a computer that could ONLY use USB devices. A whole market opened up for stuff that was previously SCSI / Serial / Parallel before: scanners, printers, digital camera interfaces, even floppy drives. Of course, it was in the manufacturers' best interests to also allow these devices to run on Windows machines - they wanted to target 99% of the market, not 3%. Thus the USB revolution began.
A similar thing happened with Firewire. If memory serves, Apple opened the licensing to anyone who wanted to use it in a device for something like $1/port. It didn't really take off, though, until Apple showed people how they could get a DV bridge or a DV camera, hook it up to their computer through Firewire/i.Link/IEEE1394 (take your pick, Apple/Sony/everyone else) and screw with their home movies, then burn them to a DVD (Superdrive). Suddenly, everyone wanted Firewire on their new "digital hub" computer, and similar product ideas popped up all over the PC market. Firewire became standard, and other products started to use it, such as external hard drives (especially since most computers nowadays have no SCSI port), scanners, and camera interfaces.
Take this with a grain of salt, as the events are somewhat hazy in my mind and are probably out of order.
Every cloud has a silver lining (except for the mushroom shaped ones, which have a lining of Iridium & Strontium 90)
Why should there be a problem with different cards for personal and comercial networks. If the access is reasonably priced I'll just put in the comercial card all the time, and use a VPN (ssh) when I need to get to the personal network.
Oh, I see the problem, wireless is still a fringe technology and not cheap. My cell phone replaced my wired phone years ago, becuase it is cheaper for me. (No long distance charges, and more time than I can talk in a month for less than a wired line) In a few years expect that comercail data networks will be cheap enough that few people bother with a personal wireless setup.
Now if only someone would tell the major players this and get them to see the light.