Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry. In the coming weeks look for columns from Current Analysis’ Peter Jarich, IDC’s Shiv K. Bakhshi, Ph.D., and Enderle Group’s Rob Enderle.
Bluetooth has come a long way from the days when its stylized “B” logo graced only a handful of handsets. According to NPD’s Mobile Phone Track, Bluetooth was a feature of 79% of handsets sold in the U.S. in the first quarter of 2008, a reversal from the 21% featuring the technology just two years ago.
Sales of Bluetooth products have been aided by steep declines in headset prices and new state laws requiring “hands-free” driving, but ubiquity has come at a price. The technology has evolved from a broad set of capabilities to focused point applications that have achieved varying degrees of success. For example, the relatively new feature of stereo-music streaming has picked up steam. However, Dial-Up Networking (DUN) or Personal Area Networking (PAN), which enables a Bluetooth handset to act as a gateway to wireless data for other devices, such as laptop computers, has fallen flat.
For much of Bluetooth’s existence, wireless data networks were too slow to be worth connecting to; furthermore, the rise in smartphones – which comprised 17% of the market in the first quarter of this year – killed off the PDA-phone pairing scenario. Indeed, when the Bluetooth SIG began a feature-branding icon program in 2006, PAN functionality was not even included.
Now the PAN is attempting a comeback, led by that old Bluetooth complement and competitor Wi-Fi. For early adopters, CradlePoint Systems currently sells a compact, battery-powered Wi-Fi router that can accept USB wireless broadband adapters; TapRoot Systems is engaging with carriers about turning Wi-Fi-enabled handsets into such tools; and at least one Windows Mobile vendor plans to make the capability standard in its handsets.
The handset as hotspot
Moving PANs from Bluetooth to Wi-Fi shifts the burden of which devices must support which technology, but it also preserves an imbalance. On one hand, Wi-Fi is a much more popular feature than Bluetooth in U.S. notebook PCs; less than a quarter of notebooks sold at retail from January to April 2008 included Bluetooth, according to NPD’s retail tracking service. While some of the new mini-notebooks from Asus, MSI, HP and others offer Bluetooth as an option, they all integrate Wi-Fi. Wi-Fi is also more common than Bluetooth in digital still cameras, digital music players and popular portable game consoles.
On the other hand, only 4% of the handsets sold to consumers in the first quarter of this year had Wi-Fi, which is supported only by AT&T Mobility and T-Mobile USA Inc. in the U.S. For Wi-Fi PANs to reach any scale, the hotspot will have to be integrated into the handset, since carrying around a separate cellular router and broadband adapter is a clunky alternative.
The other argument against Wi-Fi PANs is that they will soon be unnecessary, as WiMAX and other wireless broadband alternatives get integrated into notebook computers. This prediction holds weight in a distant 4G utopia, but the idea of casual connectivity still has appeal for users who simply want to access Internet resources on 3G networks from a massive base of Wi-Fi-enabled products as the next generation is being built out. Carriers who cater to these consumers have an opportunity to leverage their Wi-Fi-enabed phones to be more than just “in-building reception boosters” and “minute-plan savers” that are increasingly losing relevance in today’s market.
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