Like a techie’s version of A Tale of Two Cities, Intel Corporation’s
recent decision to invest $150 million in Wi-Fi technologies
signals either the best of times or the worst of times for 802.11 wireless networking.
The Santa Clara, CA-based PC chip making goliath said October 21
it would invest a total of $150 million in Wi-Fi companies over the next two
to three years. The chip maker has already given $25 million to around ten 802.11
companies. The other $125 million is earmarked for about 30 startups. The investment
is part of Intel’s $500 million Intel Communications Fund.
Daniel Francisco, Intel’s Press Relations Manager, turned away questions about
the chip giant competing with other Wi-Fi silicon shops. Francisco said the
announced investment was part of Intel’s goal of offering anytime, anywhere
mobile access and the upcoming release of the company’s first mobile chipset,
Banias, targeted toward laptops and mobile computers, will be a dual-band chip
with support for the 2.4GHz 802.11b standard along with the faster 5GHz 802.11a
technology, now gaining support. Intel expects to introduce the Banias chipset
in the first half of 2003.
Intel’s WLAN Gamble?
Although it is too soon to know the ultimate impact of Intel’s investment in
Wi-Fi, “deep pockets are now in front of the roulette table,” says
Joe Laszlo, a wireless analyst at Jupiter
In a statement, Wi-Fi product and component maker Proxim
while not commenting on how Intel’s investment will affect the company, called
the investment decision “a positive move for the market as a whole.”
Laszlo says “Intel is taking on Proxim on their home turf.”
Earlier this year, Intel decided to stop supporting HomeRF, a wireless networking
competitor of 802.11. Proxim, the main provider and licensee of HomeRF gear,
saw its stock drop 40 percent.
Intel “previously supported HomeRF and continue to support Bluetooth,
but it is clear that 802.11 is the most synergistic technology for Intel’s core,”
says Sarah Kim, a wireless analyst at the Yankee
Intel arrives in the midst of a turf war between existing Wi-Fi chipset makers.
Proxim is suing rival Intersil
for allegedly infringing
on Agere’s patents on key elements of Wi-Fi chips.
Intersil CEO Rich Beyer calls Agere’s allegations “wholly without merit.”
While Beyer said the lawsuit will not delay the company’s production of Wi-Fi
chips, Laszlo said some production could be put on hold until the patent questions
Cheaper Wi-Fi Chips
Although some see Intel’s investment and the upcoming release of its Banias
chip with WLAN support cutting into the bottom line for Wi-Fi chipmakers, Allen
Nogee, wireless analyst for In-Stat/MDR,
“WLAN chipsets (802.11b) have dropped in cost so much lately there is
really less of an advantage for PC makers in going with Intel,” say Nogee.
He believes makers of lower cost PCs will be more receptive to Intel’s WLAN
Kim says Intel’s investments may be following a trend of blue chip companies
buying their way into the WLAN market.
“The vast majority of the heavyweights in this market have acquired their
status” through buying other companies, says Kim. For example, Cisco
“The Wi-Fi market is a moving target,” says Kim. “Mergers and
acquisitions will be a key strategy for keeping alive and eating others alive,”
according to the analyst.