Wi-Fi INSIDE POSITIONS INTEL AT TOP

Intel is inside again, this time with Wi-Fi, and its comprehensive power play could redefine a young and promising market that is starting to experience its first growing pains. Over the course of a few hours last week, Intel executed a series of events tied to the launch of its Centrino wireless chip bundle in various cities around the world, culminating in a swank launch event at a New York City hotel led by CEO Craig Barrett. The global progression, the start of a $300 million marketing campaign, was reminiscent of Wi-Fi itself rapidly becoming a worldwide phenomenon.

With Centrino, the new brand that packages Intel's existing Pentium-M processor, the 855 power management chipset family and the PRO/Wireless 2100 mini-PCI 802.11b card, Intel is making its first organized move to dominate the Wi-Fi universe. The product launch, the date of which had been known for more than a month, already has cemented a spot in the wireless pantheon.

“Centrino is a watershed event for the industry,” said Jasbir Singh, CEO of Pronto Networks, one of several Wi-Fi companies Intel has invested in of late. “If there are 70 million laptops shipping with it this year, as Intel suggests, that will change everything.”

John Yunker, analyst at Pyramid Research, said, “If Wi-Fi isn't a household word yet, Intel will make it one this year.”

Intel also launched a Wireless Verification program designed to test the Centrino capabilities in conjunction with a variety of access points, software combinations, hot spot locations and service providers for Centrino compatibility. The program aims to verify about 10,000 hot spots by the end of this year.

Intel's entry goes a long way toward legitimizing Wi-Fi for big companies, especially public network carriers.

“Carriers can bring a lot of users to the table, but what they're concerned about is whether the equipment is there,” Singh said. “The ubiquity of Intel solutions will help ensure some scalability. Traditional wireless carriers were on the fence for some time, and they need a nudge from someone like Intel.”

The Centrino launch also may represent the apex in Intel's wireless efforts thus far, which include backing for hot spot giant Cometa. Just a day before the Centrino launch, Intel and Cometa announced a Wi-Fi trial at select McDonald's restaurants and plans for a commercial rollout.

Intel's Wi-Fi interests also include a commitment to invest about $150 million of venture funds in young Wi-Fi companies at every level of the market's developing ecosystem. Four of these investments, including some of Pronto's financing, also were announced just prior to the Centrino events last week.

With all these hooks in Wi-Fi, is Intel trying to ensure the sector's success, or secure its own influence?

One source in an Intel-invested company said, “Intel promises they won't interfere [in the company], but they expect to be moved to the head of the pack for interoperability testing.”

However, Singh said Intel has not put any undue influence on Pronto. “Our solution runs on Intel, and it runs on any others. Intel hasn't asked us not to run on others.”

Despite the impact Centrino may have on the Wi-Fi market, the offering isn't a guaranteed success, many industry watchers said.

“There may be some confusion about what Centrino actually is,” said Rich Redelfs, president and CEO of Atheros, which make 802.11 chipsets for access points and device modules. Atheros competes with Intel on the latter, but Intel doesn't make chips for access points.

“Centrino is not a processor. It's not the 802.11b protocol or technology. If Intel tries to portray Centrino as the new Wi-Fi, that will be incorrect,” Redelfs said.

Redelfs, who said the 802.11 vendor community benefits from great cooperation between giants like Intel and Cisco Systems and smaller firms, added that Centrino could be a drain on laptop battery life. Intel claims it won't and says it has benchmark testing to prove it.

Intel hasn't discussed its transition to faster 802.11a and 802.11g technologies, he said. “Multimode technology is really the next thing to look for. Intel is only doing 802.11b, but the world is going multimode,” Redelfs said.

Intel has indicated it will migrate to higher-speed support later this year.

Also hampering Intel's immediate hope for Wi-Fi dominance is the current unstable nature of the Wi-Fi market. Serious questions remain about usage frequency, pricing and fragmentation among service providers.

T-Mobile recently lowered its Wi-Fi fees amid speculation that usage was low. Meanwhile, prices for access points, notebook PCs and networking cards continue to decline.

While the confidence and dollars behind Centrino's launch could help make carriers Wi-Fi believers, service providers — not Intel — are the ones with their necks out trying to make the Wi-Fi business model work. In a sense, Intel's job is done if it can sell its chips into laptops — which it already has — and encourage users to by those laptops. And a $300 million marketing push will go a long way toward that end.

“Intel probably doesn't care whether Wi-Fi is a free or fee business,” Yunker said. “Won't more people end up buying those laptops if the Wi-Fi services are free? [Meanwhile] the big question for mobile operators looking at Wi-Fi is, ‘Can you make money?’”