Wireless carriers open the network to embedded devices

Where's the next big evolution in wireless?  The tier 1 operators think there's tremendous growth opportunity in embedding wireless connectivity into all types of devices and appliances.

With penetration rates hitting 85 percent and above in the U.S., wireless carriers are quickly realizing that the next big growth opportunity lies in not just connecting people to their networks, but in connecting devices.  And those devices aren't just the typical wireless handsets but all types of consumer electronics goods and appliances. Basically, any type of device-digital camera, personal music player or navigation device-can be outfitted with wireless.

This is the reason Verizon Wireless and AT&T Mobility have formed targeted open development business units and it's why Sprint Nextel's Xohm Business Unit is encouraging big vendors such as Intel and Nokia to "self-certify" their WiMAX gear to speed device time to market.

PCMCIA cards that connect the carrier's network to the laptop are a good first step but the only way carriers will reap the rewards of their 3G/4G network investment is to give the consumer an embedded device.

"Whatever device it gets embedded in is OK with me, as long as I have the ability to place it on my network," said Tony Lewis, vice president of Open Development for Verizon Wireless.

That's an almost radical position for Verizon Wireless which, most everyone would agree, has a reputation of being something of a control freak when it comes to its network.

"This was met with some skepticism early on but I think folks have come to find out how serious we are and how significant this is and, more importantly, how quick and easy it is to get onto the Verizon Wireless network now," Lewis said.

Sprint Nextel's Xohm Business Unit comes from the opposite extreme. Within a couple weeks of its WiMAX launch in Baltimore, Xohm could point to a dozen laptops with embedded WiMAX capability available in retail and 20 more in the pipeline being certified. In the next three to five years, Xohm expects to see "smaller devices really starting to take off in terms of volume. These devices will be digital cameras, video cameras ... music devices, e-books. From sheer volume they're going to be very big," said Bin Shen, vice president of product management and partnership development at Sprint's Xohm Business Unit.

Embedding rather than having external USB or card-based technology is important because embedded devices "go through the more conventional consumer electronics device channels," Shen said. "We all agree in order to drive the wireless broadband and the data adoption you really have to go through an embedded device model."

AT&T's 3G product focus is on embedded connectivity with such devices as Ultra Mobile PCs (UMPCs) and Mobile Internet Devices (MIDs) that look like small Internet-specific computers.

"When you get to ease-of-use, a plug-and-play for the customer, embedded is going to be the future, especially as you go into some of these other (non-laptop) devices," said Glenn Lurie, president of emerging devices at AT&T. "I believe embedded is the only way to go."

All the carriers talk about being open, but vendors must go through a screening process to get on their networks. Devices must work within a proprietary scheme, at least with Verizon Wireless and AT&T, and must be certified by all the carriers. Sprint's WiMAX is an IP-based technology that's available around the world but devices still need an OK to be on Xohm.

The big difference is how the networks will handle the devices, said Shen, pointing out that data is an add-on for voice-centric 3G and "WiMAX is designed for a really high-speed broadband network."

However, WiMAX has its limits when it comes to footprint. Sprint's Xohm Business Unit is expected to merge with Clearwire to form the "new" Clearwire with a $3.2 billion investment from Google, Comcast, Intel and others. That merger is expected to close by year-end and while the "new" Clearwire is promising nationwide ubiquity, AT&T and Verizon Wireless are everywhere now.

"Pretty much everybody has a handset... so where's the next big momentum in this industry? It's in the connected devices. An embedded module is a radio chip that would be placed in that device," Lewis said. "It could be as extreme as your refrigerator or toaster; it could be as useful as medical devices; as fun as gaming devices; attaching things not just to your car but to your parking space, your front door, your medicine cabinet."

As long as there's a Verizon connection, Verizon's open to partnering with any number of device manufacturers and is willing to simplify its certification process. In the end, though, it becomes a Verizon Wireless product built by an outside vendor.

"I want to qualify it for my network. I want to have the ability to have as many devices as possible working on this network. If a manufacturer chooses to go to another network that's certainly their option to do that," Lewis said. "This is giving consumers their choice on which network they want to operate this device."

Perhaps the best example to date of a wildly successful embedded device is the Apple iPhone which really is not open at all.

"We're having very nice success with the iPhone (and) the only way we got there was because I knew that when Apple walked into my office they weren't walking into Verizon's tomorrow. We could really open up and give them all of our details and work on new things and build new capabilities," Lurie said.

While admitting that the new era of open embedded devices will go both ways--exclusive and non-exclusive--Lurie believes that the relationship with the carrier, not the technology, will drive the market.

"Many of these consumer electronics players have never done mobility before... so they're looking at their core partner to help them build mobility, build a distribution model, build the device. Those are the things they're going to want to do with a partner to start and possibly down the road that will change," he said.

What won't change is the carriers' focus on the embedded device as Velcro to bind consumers to their networks and grow revenues beyond voice.

"This is the natural evolution of utilizing one of the greatest assets we have, the network, (and) more importantly giving our consumers even more choices than they have today," said Lewis. "There are lots of opportunities for folks out there to do some innovative things if they know they have an open network."