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« Broadcom Confirms Draft G Status | Main | 802.11g's Low Throughput: No Surprise »

May 22, 2003

BusinessWeek on Wi-Fi Bubble

BusinessWeek warns bubble may burst, but not the bubble it sounds like at first: The article explains that although the market is growing in terms of revenue, margins are shrinking and competition increasing. This means that even as tens of millions of home and business users get Wi-Fi access, the companies making chips and equipment will be making ever less per unit or user.

There's some good analysis in this piece in terms of the shakeout of current generation companies, mostly in the chip sector. There isn't going to be a lot of room for the Atheros's of the world given how quicky Intersil, TI, Broadcom, and others ate into what Atheros was envisioning as their technical and market advantage. Given that 802.11a has temporarily become an also-ran -- though I believe that will change long-term -- Atheros's original focus on 802.11a became a liability.

I have some critique, however, starting with the opening anecdote: the company EWD focused on hot spots, apparently, which anyone could have told you is a finite market likely to be dominated by larger companies as the size of hot spot networks grew. Maybe they weren't making hot spot equipment, but it's hard to say. (Companies like Colubris offer hot-spot versions of their enterprise gear, so they can service multiple markets.)

I dispute this entire statement: Another growth deterrent is that Wi-Fi isn't easy for an average person to use. It requires setting up an antenna, reconfiguring a computer, and signing up for broadband service. It requires buying an access point and typically *not* reconfiguring a computer. Broadband service is optional, and not a flaw with using Wi-Fi. The fact that millions of households are now using Wi-Fi would argue against the complexity. Millions puts you beyond early adopters. It also disregards that several broadband ISPs are offering Wi-Fi install kits.

At the bottom of the first Web page, the writer cites a Qualcomm executive's story with a specific London hotel's hot spot service. Fails to mention that Qualcomm's CEO is dissing Wi-Fi hot spots in an effort to talk up Qualcomm's investment in 3G technology research, like EvDO, that faces strong competition from hot spots. Also, how many of you have used hot spot service that requires special client software? Boingo's might be one example, but most Boingo locations can be access through gateway payment pages, too.

The writer should have mentioned Qualcomm's bias and talked to the London hotel: I know of one London hotel that did a public Wi-Fi rollout several weeks ago and it was a problem because of some of the settings (now fixed, I believe).

I'm sort of tired of seeing Joltage referred to as a hot spot operator that failed. They never had enough locations to make them a contender. If T-Mobile or Surf and Sip had shut down, that would be one thing: Joltage had a specific model that didn't work and that doesn't resemble most other wISPs, and is now lumped together with all other models.

GRIC's service is cited as a flat $25 per month for dial-up and $50 per month for dial-up and Wi-Fi. I believed that they charge, like iPass, based on usage. I have been unable in the past to get rates out of GRIC.

Cisco lowered prices on its Wi-Fi gear by about 25% last year to remain competitive, says Bill Rossi, vice-president and general manager of Cisco's wireless-networking business. As accurately, Cisco cut into its amazingly large WLAN margins when competitors started offering equipment with the same features for less. I guess that is competition.

Cisco, among others, claims to have the solution. It expects to continue charging $400 to $500 per hot spot... I guess this is some of the confusion in this article: hot spot and access point aren't the same thing, but the writer uses them interchangeably.


All this talk about a wi-fi bubble is just noise to anyone who's really interested in the technology. Wi-Fi is cool technology whether or not the dull venture capitalists and people trying to start hot-spot businesses make it or not. Why should I care?


I tend to agree with Simon. So many of the articles like this one, are barely worth the effort to rebut. It has an apocalyptic title like, "Are We All Facing Wi-Fi Armageddon.?" (The current set of buzz words include: bubble, melt-down, demise... you get the picture.) Then what follows is a series of anecdotes, loosely strung together which tends to slowly backtrack from the portentious title's suggestion, but further demonstrates that the author has never actually attempted to use this technology. The piece finally ends in a whimper, with some form of, "Well, we'll all to wait and see anyway, won't we?"

This is, by far, the easiest type of biz-tech journalism to produce, and you gain very little from taking the time to read it. It's the title that's meant to leave the lasting impression.


Right: the title of the BW piece should have been, "Too Many Chipmakers Slicing a Growing Pie." Given that the article discussed the massive growth and revenue in selling equipment, the bubble part is overstated.

Who makes the Wi-Fi money? Equipment makers, certain chipmakers, and service vendors who install networks. Who doesn't? Hot spot operators, some chipmakers.

The Qualcomm quote was disgusting. Why didn't the reporter bother to ask Jeff Belk to walk through the ease of setting up a CDMA 1X or EvDO card? Let's overlook the fact that there are no CDMA networks in the EU (other than some Eastern European countries).