Last year no single technology drew more deals or dollars than wireless, in a year when record amounts of venture capital money were poured into network start-ups.
According to a PricewaterhouseCoopers survey, 85 different wireless start-ups received $776 million in 101 separate funding rounds between the fourth quarter of 1997 and the fourth quarter of 1998.
Yet analysts say users should not plan to rely on wireless in the near future because of issues such as technology limitations, lack of customer enthusiasm for corporate wireless services, and tough competition.
As a result, only about three million people will subscribe to wireless data services this year, although, according to Dataquest, this figure is expected to rise to more than 36 million by 2003, valuing the market at about $3 billion.
Naqi Jaffrey, a Dataquest analyst, says that the widespread adoption of wireless technology has been inhibited by multiple proprietary technologies that are deployed at different frequency bands. But he adds: "What is happening right now is that most of those impediments are going away."
There are two types of wireless service - fixed, which delivers services to a building, and mobile, which reaches a moving target. Fixed wireless is far ahead of mobile in its ability to transmit data reliably, however, and vendors such as Advanced Radio Telecom, AT&T, Nextlink, Teligent and Winstar already provide high bandwidth, fixed wireless services to customers in and around many major cities.
But the technology's future promise has led to an ongoing flurry of activity in the market.
Network equipment giant, Cisco Systems, and cellular phone maker, Motorola, are investing $1 billion over the next four to five years to develop standards for wireless networks based on Internet technology that transmits data, voice and video services.
Motorola has also signed a ten year pact with Sun Microsystems to enable network operators to deliver wireless telephone services to businesses and consumers.
British Telecom and Microsoft also announced this month that they plan to build Internet based wireless network products and services, following in the footsteps of a separate venture undertaken by Nextel Communications and Netscape.
Microsoft likewise teamed with Compaq Computer earlier this year to unveil the Mobile Enterprise Initiative for Europe, which falls under their Frontline Partnership.
The aim is to establish a advisory council of IT managers that looks at European corporate mobility, and to provide 10,000 IT developers and ISVs with Windows CE application development training to encourage European corporations to adopt the operating system and related devices. Microsoft believes the market in Europe "is more promising" than that of the US.
But the software giant has also invested $600 million in Nextel Communications to boost the market for wireless applications that are based on the Wireless Applications Protocol (WAP). The partnership is expected to yield one of the first systems for delivering Internet data to mobile phones, using a wireless packet data network.
The investment will fund Nextel's Online system, which is scheduled for deployment to 50 million points of presence (POPs) by the end of the year. The system's WAP based interfaces strip out Web graphics, enabling Internet data to be delivered more easily over wireless links.
The WAP Forum, which develops standards for building WAP based applications, was officially founded by Ericsson, Motorola, Nokia and Phone.com, (formerly Unwired Planet) in January of this year, but has since been joined by an additional 33 companies, including Nextel and Microsoft.
Sprint and Yahoo have also got together to create a custom version of Yahoo's realtime sports, weather and news directory. The data will be tailored for presentation on the 12x4 character displays of data enabled cell phones, using Online Anywhere's Oasis tool. Yahoo acquired Online Anywhere in an $80 million stock swap just before announcing the Sprint deal.
But telecoms equipment supplier 3Com also plans to expand into the wireless network space. The company is targeting four areas - wireless personal area networks for home users; inbuilding wireless local area network systems for corporations; wireless Internet access services for mobile professionals using its Palm VII device, and wide area network equipment for service providers.
This summer, the supplier intends to launch Palm.net, a wireless data service and portal site for its Palm VII handheld device that will be provided through Bellsouth Wireless Data. A lower priced home version of the 11 Mbps Airconnect system is due to follow at the start of next year and will bear 3Coms' Homeconnect home networking brand.
But vendors are also trying to address the obstacles that have so far prevented the widespread adoption of wireless technology - the most frustrating of which is the fading in and out of connections when users move around. This problem is compounded by the fact that most hardware today is not able to deal with complex data transmission.
As a result, a band of 721 companies, including Ericsson, IBM, Intel, Nokia and Toshiba, have got together to try and revolutionise wireless connectivity for personal and business mobile devices by developing royalty free standards.
And they have come up with a short range radio chip, called Bluetooth, that enables users to connect a wide range of devices together without the need for cables to make voice and data transmission seamless.
Because a Bluetooth radio will operate on the globally available 2.45 GHz ISM 'free band', international travelers will be able to use their equipment worldwide. Such devices will not need to remain within line of sight and can maintain an uninterrupted connection when in motion or even when placed in a pocket or briefcase.
The ultimate aim is that all mobile devices will include a chip for sending and receiving information on a specific radio frequency and communicate with each other by means of nodes installed in corporations, cars, and eventually, public areas such as airports and hotels.
Products based on Bluetooth chips are due to start shipping by the middle of next year and may even be included in consumer devices such as cell phones, personal digital assistants (PDAs) and cars, although large businesses will probably be the first beneficiaries.
Simon Ellis, marketing manager for Intel's mobile handhelds group, says: "Bluetooth does the things you do today, but in a much easier way. It's going to replace all the wires."
Ericsson, meanwhile, delivered the first Bluetooth Development Kit in May, which it describes as a "toolbox" of equipment, providing a flexible design environment for engineers to integrate Bluetooth into a range of electronic devices.
But the International Telecommunications Union (ITU) has also been working to set standards for wireless phones, although it decided to endorse several different wireless technologies backed by competing companies, after initially setting its sights on a single worldwide standard.
This goal had also been supported by some of the big international wireless carriers because it would enable users to take their phones from country to country, without needing to switch handsets.
But the industry has split into camps, with Qualcomm and Ericsson both supporting different flavours of code division multiple access (CDMA) technology called CDMA, while others, including AT&T, which developed the technology, support a divergent standard known as TDMA.
The Ericsson backed W-CDMA serves as an upgrade path for GSM phones, which are used by half the wireless consumers in the world, while Qualcomm's CDMA2000 can be used to upgrade today's CDMA operators.
Separately, Ericsson has also formed a focus group, called 3G.IP, with eight other telecommunications companies, to develop an Internet Protocol based wireless system for third generation (3G) mobile phones. The other members are AT&T, British Telecom, Rogers Cantel, Lucent Technologies, Nokia, Nortel, Telenor and Telecom Italia Mobile.
Third generation wireless technology will enable consumers to exploit high speed Internet connections and other new services such as high speed data access, imaging and video conferencing, from their mobile phones, and carriers expect to start shipping such devices as soon as next year.
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