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Bluetooth Bouncing Back With A Bite

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After months of headlines declaring it passe and a marginalized niche product eclipsed by glitzier offerings, Bluetooth is rebounding.

In contrast to the pall that has settled over much of the tech sector, there has been a flurry of renewed interest in this short-range wireless technology.

The turn-around comes on the heels of a series of news items surrounding product delays and misfires topped off in March by Intel officials reportedly calling Bluetooth dead for all but the narrowest of markets.

Unveiled in 1999 by Ericsson, Bluetooth was seen as a way to cut the ties of cables restricting computer users. Requiring little power, Bluetooth was viewed as ideal for networking mobile devices, including personal digital assistants (PDAs), cell phones and printers. The resulting hype was followed by disappointment as delays kept Bluetooth products from rapidly coming to market.

Bluetooth on Trial

“2000 was a year of trials and tribulations for Bluetooth,” said Joyce Putscher, Director of In-Stat’s Consumer and Converging Markets and Technologies Group. A year later “more products are closing in on production schedules and are coming to market very soon,” Putscher said. In-Stat has released several recent reports showing upbeat Bluetooth prospects.

Along with the rosy outlook comes a more realistic image of Bluetooth’s potential market share. Cahners In-Stat Group has shaved earlier estimates of the number of Bluetooth-enabled products from over 1 billion to 955 million by 2005. Still, analysts are projecting a 360% annual compound growth rate over five years with $4.4 billion in sales in 2005.

Rather than waiting for Bluetooth chips to be embedded in products, a number of add-ons are in effect creating Bluetooth-enabled devices, according to the report entitled “Access Anytime, Anywhere: Bluetooth Will ‘Make it So!”

Adapting to Bluetooth

“Adapters and cards will rule the lion’s share of the market in the near term,” according to Putscher. Among the adapters include:

  • Red-M’s $199 clip-on Blade device creating Bluetooth-enabled Palm Vx PDAs.
  • Users of Palm PDAs that support the industry-standard postage stamp-size Secured Digital/MultimediaCard slot will be able to buy a $150 Bluetooth card by the end of the year.
  • Not to be left out, the PocketPC operating system will support Bluetooth.
  • 3Com offers a $149 Bluetooth PC card for laptops.

Dialing for Dollars

Naqi Jaffery, Chief Analyst for the Washington, DC-based Strategis Group, believes that the real impact of the networking technology will not be felt until Bluetooth is embedded in everything from laptops to next-generation cell phones.

Analysts at Merrill Lynch agree, saying next-generation handsets will be vital to Bluetooth’s growth. Consumers should begin seeing products in 2002, the same year British-based chipmaker Cambridge Silicon Radio (CSR) says it will be able to drop the price for Bluetooth chips from the current cost of around $10 per chip to $5, the “sweet spot” device manufacturers have called for. CSR makes nearly half of the world’s Bluetooth chips.

Another boost to Bluetooth was the recent announcement of Qualcomm releasing its first Bluetooth-ready chipset destined for more than 50 cell phones, several to be ready before the end of this year. The chipset supports the CDMA 2000 1x technology capable of 307 kbps data speeds and GPS.

Phil Redman, an analyst with the Gartner Group, has heard such claims before. Unlike Jaffery and Putscher, Redman is pessimistic about Bluetooth’s future. Before Bluetooth goes anywhere, it will need to reach a mass market. Redman believes the mobile networking standard is not robust, is insecure, lacks compelling applications and will cost too much.

So, how does Bluetooth stand to benefit m-commerce? In-Stat targets hotels, shopping malls, golf courses, and airports as likely markets for Bluetooth adoption within the next two years. However, it is generally agreed upon that it will be the outpouring and acceptance of new Bluetooth-enabled wireless phones designed for 2.5G and 3G networks that will ultimately play a deciding role in the technology’s eventual success or failure.

Ed Sutherland is a New York-based editor and journalist. His article first appeared on M-CommerceTimes, an site.

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