Wi-Fi is about to get a whole lot easier

Going Wi-Fi is about to get a lot easier. For many consumers, setting up an in-home Wi-Fi connection point is something of a hassle. Before you can enjoy the convenience of logging onto the Web without cables and wires, you need to hook up some gear and create your own "hotspot."

But that's set to change come mid-2010, when a tech upgrade will make it easier for users of consumer electronics to exchange files between electronic gadgets.

On Oct. 14, the Wi-Fi Alliance, a tech industry consortium, said its members will release technology that effectively turns gadgets into mini access points, able to create wireless connections with other Wi-Fi-enabled gadgets or broadband modems within a radius of about 300 feet. The alliance includes Intel, Cisco Systems, Apple, and more than 300 other makers of the equipment that runs Wi-Fi networks, often used to provide wireless Web connections in homes, cafés, hotels, and airports.

Sales erosion possible
The new technology, called Wi-Fi Direct, will be built directly into consumer electronics and automatically scan the vicinity for existing hotspots and the gamut of Wi-Fi equipped devices, including phones, computers, TVs, and gaming consoles. Owners of most existing Wi-Fi-enabled devices will be able to upgrade to Wi-Fi Direct with a simple software download.

While the revamp may make life easier for consumers and business owners, it may erode sales of other Wi-Fi compatible equipment. For starters, Wi-Fi Direct may curb demand for routers and other products that make up the $1 billion annual market for Wi-Fi access points, now present in about 30% of U.S. homes. "The IT department doesn't have to set up an access point," says Victoria Fodale, a senior analyst at In-Stat. "Same thing in the home. You can do the same thing with less equipment." Cisco and Netgear are among the biggest sellers of Wi-Fi equipment.

The feature also could disrupt usage of wireless Bluetooth technology that, for example, helps users of the Apple iPhone play games with each other outside a wireless network. In the future, some consumers may use Wi-Fi Direct instead. Though Wi-Fi connectivity tends to drain battery life faster than Bluetooth, it's also faster and allows for transfer of richer multimedia content like video.

Marketing blitz on the way
For Cisco, Wi-Fi Direct could make up for lost sales of Wi-Fi access points through other Wi-Fi-enabled equipment including camcorders. The company didn’t make a representative available for this story.

Members of the Wi-Fi Alliance plan to promote their new technology with a major marketing blitz. Intel has already begun briefing retailers, who will promote the feature in their stores, says Gary Martz, senior product manager at Intel. The chipmaker will also heavily promote the capability in the first quarter of 2010 as it unveils its next-generation Wi-Fi chip package for computers.

Chipmaker Marvell, meantime, is planning to collaborate with its consumer-electronics partners to mark enabled devices with special stickers and to promote the capability through ads. "We will make a big splash with Wi-Fi Direct," says Bart Giordano, product marketing manager at Marvell.

A boon for smartphones
Almost half of the 760 North American consumers surveyed in May by In-Stat said they use their Wi-Fi-enabled devices for more than connecting to the Internet. "We feel that it opens up a whole new set of applications and use cases," Giordano says. "Wi-Fi Direct will really drive the next generation of growth in [the use of Wi-Fi] consumer devices."

The feature could boost usage of Wi-Fi capabilities in smartphones and television sets in particular. "It makes adding Wi-Fi to devices that don't have Wi-Fi more compelling," says Kelly Davis-Felner, marketing director at Wi-Fi Alliance. Marvell is already talking to makers of TVs, few of whom offer Wi-Fi connectivity today but are now considering adding the capability to let users wirelessly transfer photos and video from their Wi-Fi-enabled cameras, camcorders, and netbooks directly onto TV screens.

There's also growing interest from manufacturers of cheaper cell phones, Giordano says. Today, Wi-Fi can be found mostly on high-end smartphone models. "The new use cases are really going to allow the technology to proliferate among devices it's not been considered for," Giordano says. "We are expecting that this will drive a lot of growth for us." Worldwide, shipments of Wi-Fi-enabled cell phones should rise from 64.9 million units last year to 314 million units in 2013, according to consultant IDC. "This technology is going to be ubiquitous in every notebook and netbook in 12 to 18 months; it's going to be a very fast ramp," Martz says. "And I think that's a pretty conservative [estimate]."

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.