ANALYSTS WARN OF WIFI BUBBLE
WiFi, the new darling of the telecom crowd, is a bubble in danger of bursting, say some analysts who worry that euphoria over the technology could lead to the same kind of supply glut that proved the undoing of many telecom businesses in the last couple of years. One of the biggest worriers is Adventis analyst Andrew Cole: “WiFi is overrated and headed for a fall,” he says. One big question mark is the level of demand. The WiFi consumer market began as a movement of tech-savvy users who made a game of finding free nodes to sponge off of. Turning freeloaders into paying customers is a challenge the music industry has grappled with for several years without much success. In addition, using WiFi can be tricky — it requires setting up an antenna, reconfiguring the computer and signing up for a broadband service. Finally, with barriers to entry very low, competition in consumer WiFi could turn cutthroat, pitting rivals ranging from tiny boutique ISPs to powerhouses like Verizon against one another. Consolidation among WiFi gear makers has already started, with Cisco’s purchase of Linksys last December, and analysts predict the WiFi chip market is next. One bright spot on the horizon is the market for WiFi equipment for corporations. “We’re still in the early days of enterprise WiFi, which is the big opportunity,” says one wireless consultant. About 40% of U.S. companies currently have some kind of WiFi network and about a third of those plan to expand their networks in the next 18 months, according to wireless researcher ON World.
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