Editor's Corner

It looks like consumer electronics (CE) companies are beginning to look at WiFi beyond just embedding a WiFi chip so that consumers can wirelessly access the Internet. Sony Computer Entertainment America is running a promotion that involves offering a new firmware upgrade for its PlayStation Portable (PSP) system, called version 3.30, that will enable PSP users to play games online, browse the Internet and download podcasts on all 7,000 of T-Mobile USA's hotspots for free for six months. After the six months are over, T-Mobile will offer PSP owners an option to purchase a subscription at a special rate.

It's a rather creative way for both Sony and T-Mobile to drive customer adoption. Sony notes that more PSP users are going online to challenge each other in multi-player games. Giving them the ability to do that in more places only increases the attractiveness of the device. T-Mobile, in return, potentially receives access to the millions of PSP owners who will try the service for free, get hooked on using it for six months for online gaming and be willing to pay the special rate reserved just for them (no word on what that special subscription rate is).

Certainly offering these types of incentives aren't new. Computer companies often bundle Internet access with a computer at the point of sale. But bundling for WiFi access is new, and it's likely to become more prevalent as WiFi technology has matured and more hotspots blanket the country. The Sony/T-Mobile deal shows that bundling offers an even greater opportunity for WiFi services as CE companies begin putting WiFi chips in more than just laptops.

This trend bodes well for WiMAX too. Sprint Nextel will soon enter unfamiliar territory by moving away from selling subsidized devices that are tied to service contracts through its own distribution channel to relying on a number of consumer electronic companies to embed WiMAX chips in their products for sale directly to the end user. Right now Sprint is investing heavily in the WiMAX ecosystem to ensure that device makers embed WiMAX chips and that devices are cheap enough for consumers to buy them at retail.

Initially, it will be Sprint's own investments and marketing dollars that will drive end users to the point of sale, but Sprint and other WiMAX proponents envision a day when WiFi/WiMAX chips are embedded in a plethora of devices, such as digital cameras and gaming devices, once the technology matures. WiFi is priming end users for this notion--to the point that they will want to initiate a multi-gaming session outside of a WiFi hotspot. In the end, it may very well be CE companies that commonly subsidize wireless service as a way to differentiate their products from the competition.--Lynnette