Subject: [NEXTEL-1] Wireless LANs Stalled Among Tight-Fisted Companies

From: Marcel <[email-masked]>
Date: Sun, 23 Feb 2003 16:16:13 -0500

Wireless LANs Stalled Among Tight-Fisted Companies
Tue Feb 18, 7:06 PM ET

Antone Gonsalves, TechWeb News, InformationWeek

Companies gave the cold shoulder to Wireless Fidelity technology last
quarter. Business sales for the emerging wireless LAN technology based on
the 802.11 standard fell 6% in the fourth quarter of 2002 compared with the
previous quarter, research firm Dell'Oro Group reported Tuesday.

However, the small-office and home-office
market for the wireless Internet connections
was still strong, growing 13% from quarter to
quarter. Total revenue for the quarter was $419
million, 3% more than the third quarter.
Enterprise sales accounted for 40% of the
revenue. For the year, market revenue was $1.6
billion, compared with $1.2 billion in 2001.

Big companies are shying away from Wi-Fi
because of security concerns. Fueling such
suspicions are experiences like that of retailer
Best Buy Inc., which last spring had to
temporarily unplug its wireless system after a
security analyst in a parking lot was able to
capture credit-card numbers and other data
from the company's wireless cash registers.
The security breach was fixed and the network
turned back on.

"In general, security is still an issue, and a lack
of standards is still a concern with the
enterprise," Dell'Oro analyst Seamus Crehan
says. "Also, IT budgets are still very
constrained, and, while compelling, wireless
LANs are still somewhat of an additional or
incremental technology to the network."
Companies aren't willing to replace their wired networks, he says.

The Wi-Fi Protected Access (WPA) standard should help ease concerns
over security, Crehan says. Products incorporating the standard are
expected by the second half of the year from major manufacturers of
wireless networking technology. The standard is a joint effort by the Wi-Fi
Alliance and the Institute of Electrical and Electronics Engineers. In
addition, the IEEE is expected to publish in July the latest version of the
802.11 specification, which increases bandwidth from 11 to 54 Mbps and is
backward compatible with previous specifications.

The small-office, home-office market was driven by price declines and
promotions, coupled with an increase in the number of subscribers for DSL
and cable. The two broadband connections bring the Internet to a Wi-Fi
transmitter in the home, office, airport, or other public place, where it can be
picked up by a receiver-equipped notebook or handheld device. The number
of DSL and cable subscribers increased by 7 million in the fourth quarter,
Dell'Oro says.

Wi-Fi has had lots of support from high-tech vendors. Dell Computer is
equipping most of its laptops with Wi-Fi connections, Sony is installing it in
a host of electronic gadgets, and Intel plans to release chips with Wi-Fi
receivers this year. Intel is also investing $150 million in Wi-Fi startups.

Companies have been joining forces in building Wi-Fi networks in public
places to make some money off the 40 million people, or nearly 25% of the
workforce, that high-tech researcher the Yankee Group says are mobile
workers.

Last December, AT&T, IBM, and Intel, along with venture-capital firms Apax
Partners and 3I, formed Cometa Networks. During the next two years, the
joint venture plans to build 20,000 Wi-Fi service hot spots, public locations
outfitted with the wholesalers' transmitters and receivers. Cometa plans to
sell wireless broadband access to communications service providers, which
will sell the service to businesses and consumers.

Starbucks Corp. offers Wi-Fi service in nearly 2,000 coffee shops, and
Borders Group is deploying the technology in bookstores nationwide.
American Airlines, Delta Air Lines, and United Airlines have jointly signed an
agreement with T-Mobile USA to install the technology in 100 airport clubs
and lounges.

http://story.news.yahoo.com/news?tmpl=story&u=/cmp/20030219/tc_cmp/iwk20030218s0011
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