Last week, the Wi-Fi Alliance and market research firm In-Stat announced that sales of Wi-Fi chipsets had already passed the 100 million mark for 2005. Total chipset sales for the year are now expected to reach close to 120 million. The Alliance, a non-profit industry association of more than 200 member companies, said that this explosive 64% average yearly growth rate reflects the transforming nature of Wi-Fi as well as the value of interoperable, standards-based technology. We discussed the future implications of this growth with Frank Hanzlik, managing director of the Wi-Fi Alliance.
Q: In your view, what is the significance of passing the 100 million mark in annual sales and the projection of 120 million chipsets shipped before the end of the year?
A: It is an indication that Wi-Fi has truly come of age. And it is a very exciting time for us when you think about the Wi-Fi industry. We have gone, in essence, from zero to over a hundred million chipsets in really about 6 years time. I'm not aware of another related technology ramp that has been that rapid. Today more than 90% of notebook computers are Wi-Fi enabled. So as we look ahead, it means hopefully that more and more devices will have Wi-Fi capability -- such things as consumer electronics and phones. By the end of this year, the projection is over 120 million chipsets. And there is some additional data that we have gathered that is not included in the release to the press. The same market research firm, In-Stat, is talking about a 200 million sales mark by the end of 2008, so the current figures may well double in three years.
Q: I'm trying to think of another technology that has paralleled this.
A: That was exactly what we were doing too, asking ourselves that same question. And certainly in our informal analysis, we have not been able to think of another, or certainly not a recent technology, that has achieved that kind of milestone in such a short period of time. Even Bluetooth, for example, which has been very successful in the phone applications, took some time to reach that level of ubiquity.
Q: The fact that there is now a huge base of people with Wi-Fi enabled devices means that Wi-Fi delivery systems, certainly outside the home at least, are in some ways playing catch up. I think that is possibly unique.
A: That is unique. It's true that you could probably think of other technologies that may have very widespread deployment platforms. One that comes to mind is IrDA [infrared wireless] which is built into almost every notebook you buy. But how many people use it? Where as Wi-Fi, which as I mentioned is now built into 90 percent of all notebooks -- that is a technology that most people actually do use. I would even put Bluetooth into that category. There are a lot of phones that are equipped with Bluetooth but it is a small subset of people who actually use that capability. With Wi-Fi on the other hand, if you have it in your platform, then because of hotspots, municipal wireless and home networking applications, there is a very good propensity that you are going to use it and love it. So at least anecdotally we certainly believe there is a very high correlation.
Q: Based on the volume of sales, where do you think Wi-Fi is now headed? What is the Alliance's view?
A: We think we are just getting started. It is a very exciting milestone but we think it is just the beginning of the evolution beyond the PC. There are a number areas we see propelling that growth. One
area is phones. We expect to see a combination of not only Wi-Fi only handsets, and there are certainly some of those out now, but increasingly a handset that can support both Wi-Fi and cellular capability. So if you were in a government campus environment, where the cellular may not be very good because of below ground facilities, for instance, you can leverage the benefits of Wi-Fi in those local areas with voice over Wi-Fi capability. And then when you leave, you are still connected through the cellular network. We see things like that as a very exciting possibility. The other area is the consumer electronics -- gaming applications, multi-media applications, being able to move pictures, video and music from one part of your home to another over a high-speed wireless network to create a more exciting user experience.
Q: Really that just takes us one step further to a convergence into a kind of mega-platform.
A: That's a great point. We do see the future really being hybrid networks. It is not Wi-Fi verse cellular, for example. It is about how people can leverage both of those to be more connected. So we see the future is very much in hybrid networks, and where possible, most users would prefer a wireless verse a wired connection. That doesn't mean that wired is going away. It certainly isn't. There are a variety of situations where you are going to want wire in your building. But there is an increasing trend where you want to be able to piggyback onto that wiring and leverage wireless where ever you can.
Q: You have watched the battles in the last couple of years over what municipalities can and cannot do in terms of deploying Wi-Fi based municipal networks. What is the Alliance view on these battles?
A: We believe that the most important consideration, whether the network is fee-based or free, is that it is using Wi-Fi that certified. And the reason we say that is that we've certified over 2000 products since we started in 2000. And we absolutely believe that this certification program with its a very robust testing program ensures interoperability and that users really have the best technology. So in some places you are going to pay and in some place it is going to be free, depending upon your business model or the approach being implemented. In just the past week, we've seen New Orleans make a big announcement about municipal Wi-Fi for free. So certainly there is a trend that many municipalities seem to be pursuing there. We certainly believe there is plenty of room for both free and fee-based models out there.
Q: So its isn't a case of one or the other.
The market is going to sort things out. There is plenty of opportunity we see for cases where people will be happy to pay for good service and other cases where people will be excited to get a service for free. The capabilities are different in terms of what you pay for and what's free. That's fine. The technology matures and with that comes different ways to offer the service.
Q: How does WiMAX fit in? Is this another part of the emerging hybrid network?
A: If you look at WiMAX, there are two very distinct flavors. The initial stuff that has started to come out is really focused more on backhaul. Maybe you can't get DSL or cable in your area for the price you want. WiMAX could be a nice alternative to some of the wired backhaul that exists today. So from that perspective it is extremely complementary to Wi-Fi. It is another way of lighting up a hot spot or a government building. And then the other version of WiMAX that probably gets more of the attention
is the mobile version of WiMAX. And that is treading more in the waters, not of Wi-Fi, but the cellular networks. And so I think the cellular and the WiMAX folks are sorting it out and I think we will see that there is a place for both those technologies.
Q: So as you say, the future is hybrid networks.
A: Yes. All the big semiconductor manufactures are all producing designs and solutions that have the ability to support different wireless technologies. And each of these technologies does different things. You can only bend physics so far. If you want to go really short, then there are certain technologies that are optimized for that. If you want to cover the whole DC area, or the entire eastern corridor, there are certainly other technologies that are better for that.
Q: Are there other factors that have contributed to reaching Wi-Fi's current sales level?
A: Certainly one factor contributing to Wi-Fi's very unique success is that it has such a strong grassroots support system. People are very excited about the ability to use Skype service, for example, and to be able to leverage that in a Wi-Fi kind of environment. So you see Wi-Fi being pushed from a variety of angles. Also, the government folks and large enterprises have become much more comfortable with the security of Wi-Fi in the last couple of years. Additionally, users are finding that the technology is easy to set up.
Q: Security is still one question for a lot of people.
A: That is changing, however. In September last year, we brought out what we call WPA2. That supports the IEEE 802.11i standard and includes AES encryption. Because of that, it is eligible for the FIPS 140-2 compliance. We believe that this has been a very important milestone in getting the larger enterprise and government users comfortable with the security of Wi-Fi.
Q: So at this point, a lot of the security concerns are really residual concerns?
A: Yes. And now we are going to make WPA2 mandatory in our certification program beginning in March of next year. That's an early heads up on that. So after March, all the products that are Wi-Fi certified will have that WPA2 security. So that is just another reason to look for that certification.
More information on Wi-Fi product certification can be found at www.wi-fi.org.
