Despite the excitement created by the 2.5G and 3G connectivity standards for wireless data services, it is impractical to expect that the 3G revolution will happen tomorrow, mainly because the 2.5G and 3G technologies are costly, scarce, not well tested, and still being defined. However, the market is already filled with mobile devices, such as laptops and PDAs. According to IDC, close to 17 million handheld companion units were shipped in 2001. Palm and PocketPC devices experienced great success in the enterprise and consumer markets. At the same time, people realized the efficiency gains brought by the Internet and access to the vast amounts of organized data that it provides. As the workforce is getting more mobile and people are realizing the benefits of receiving instant information, the demand for "anytime, anywhere" access to corporate and personal data is bound to increase.
A new wireless standard came into play. 802.11, also called Wi-Fi, has become the most popular standard for wireless Internet access technology. Using radio frequency connections between a base station and devices with add-on or built-in 802.11 wireless cards at roughly 1000 feet radius, Wi-Fi gives access to the Internet and remote corporate and personal data without using the wires and cables of a conventional local area network in public places, homes, and offices. The global push to adopt 802.11 is based largely on its high bandwidth of 11 Mbps and rich user experience that is comparable to being on a wired company LAN. This standard is open, unlicensed, internationally adopted, interoperable, and supported by every major player in the wireless LAN industry. Wireless Ethernet options are available today for most consumer devices, and the next generation of laptops, handheld PCs and PDAs will be wireless Ethernet enabled.
Enterprises have taken the most-prominent role among the early adopters of Wi-Fi wireless LAN technologies. Vertical markets and enterprises accounted for the majority of shipments and will continue to do so. Wi-Fi technology serves as a practical extension to existing broadband and high-bandwidth wired LAN technologies. As enterprises become more convinced that wireless LAN technology adds hard and soft dollars to the return on investment, and as Wi-FI devices reach the IT market at lower costs and in larger shipments, the industry will see a huge increase in 802.11 adoption in corporate offices, plants, campuses, and other premises. Public access is tagging right behind the corporations, and in the beginning could even outrun the corporations while they are ramping up. The main venues for public 802.11 access points include coffee houses, with Starbucks leading the pack; hotels with, Four Seasons and Hilton as the earliest adopters; airports; train terminals; restaurants; and universities.
As in the telecom business, distinct camps of players have formed quickly to take advantage of the unlicensed frequency that Wi-Fi services are using. On the smaller scale side of business, a number of wireless network companies, also called "microcarriers"by the industry tycoons, are actively building 802.11 networks in public spaces installing equipment and leasing space from the landlords. Three-year-old wireless LAN service provider Wi-Fi Metro Inc. expanded on the "hot-spot" concept, providing a large area of wireless Internet connectivity unrestricted by physical boundaries. The first hot-spot covers roughly an eight-block area of downtown Palo Alto, allowing Wi-Fi Metro subscribers to log on whether they are in their favorite cafe or out on the sidewalk.
Then there are service aggregators, who purchase from 802.11 microcarriers on a wholesale basis, integrate these networks together, and sell a single service to customers. Boingo, who at launch had the largest wireless broadband footprint in the world, focuses on the complex integration of hundreds of Wi-Fi wireless Internet providers around the world into a single service, providing marketing services, customer support, and billing. On the larger scale, this market of course will not be missed by the carriers. VoiceStream, who recently acquired MobileStar and took over its large network known for offering the Wi-Fi services at Starbucks, is the first carrier to move into the Wi-Fi space. Under the name of T-mobile, VoiceStream started to offer wireless Internet services in California and Nevada, and plans to be in 45 of the top 50 U.S. markets, following with similar branding campaigns of T-Mobile International's subsidiaries in Germany, the United Kingdom, Austria, and the Czech Republic.
The popularity of laptop computers and handheld devices is fueling demand for wireless LANs. Many manufacturers, such as IBM, Toshiba, and Sony, are shipping laptops with built-in Wi-Fi hardware, allowing these machines to connect to a WLAN straight out of the box. IBM has become a leader in constructing wireless LANs, using its unrivalled size to capture market share through its global services division. Already, Microsoft's Windows XP operating system supports Wi-Fi, and Microsoft announced plans to make a wireless portable monitor that uses Wi-Fi technology to link to the terminal and keyboard.
All this is increasing consumer awareness of WLAN products, accelerating chip sales, and creating demand for WLAN infrastructure. Poor market conditions and the lack of next-generation handsets, which has forced mobile operators to delay the launch of their 3G networks, also gives a boost to Wi-Fi.