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Intel chief: Is Wi-Fi over-hyped?

The president of Intel Corp., Paul Otellini, warned attendees at last week's Telecosm conference in Squaw Valley, Calif., that Wi-Fi is "in danger of being over-hyped," and allowed that his own company was probably part of the problem.

"To some degree we may be guilty of that by spending hundreds of millions of dollars in our Centrino advertising campaign," he said.

Intel launched its splashy campaign to promote its Centrino technology for laptops earlier this year. The company announced its strategy to brand the combination of its Pentium M microprocessors, the 855 chipset and a Wireless Pro solution under the Centrino banner in January.

There has been something of a reaction recently against the current public hot-spot mania, at least in the media. One especially dire example appeared last month in a Newsweek article entitled "The Wi-Fi Bubble" by Karen Lowry Miller. Miller questioned the hot-spot business model and suggested that the concept was "... now in that weird bubble-phase when exuberance coexists with red flags." She cited a Forrester Research report in which analyst Lars Godell concluded that the business models for most public Wi-Fi providers don't hold up. "The gold rush is on as if the dot-com boom and bust never happened," Godell wrote. Miller also pointed to the "first hints of a shakeout," citing the demise of start-up MobileStar in 2002, which was acquired by T-Mobile.

Miller's observations and Otellini's concerns notwithstanding, the Wi-Fi hype machine shows no signs of slowing, even at Intel. In September, the Santa Clara, Calif.-based chipmaker will launch a massive, consumer-targeted promotion called "One Unwired Day." On Sept. 25, people will be able to use wireless Internet access for free in thousands of locations around the country, courtesy of Intel. (A list of participating hot spots can be found at www.intel.com/unwire.)

Intel also plans to host big festivals in major markets, such as New York City, Chicago and San Francisco, to promote the technology, along with a number of smaller events in lesser markets, such as Seattle.

These events will include live concerts, product demos and drawings for prizes, company representatives said. Prize packs include notebook PCs with Intel Centrino mobile technology, Linksys wireless home-networking products and Wayport wireless access cards. Barnes & Noble, Borders Books & Music, Marriott International and McDonald's are among the companies with hot-spot locations that will be participating.

Of course, Intel isn't fueling the Wi-Fi hype machine all by itself.

The market has been awash recently in easy-to-install home-networking products based on Wi-Fi, and broadband access is spreading like crabgrass; both trends are adding considerable fuel to the Wi-Fi fire.

Moreover, the prices for 802.11 chips and gear have been dropping almost as fast as the number of public hot spots has been rising. Sky Dayton, chief executive at Boingo Wireless -- a start-up trying to establish the underpinnings of an 802.11 roaming service -- who participated in a panel discussion at the conference, predicted that the average price of the chips would drop by half to $8 this year, $4 next year and as little as $2 in 2006.

Boingo currently deals with approximately 2,600 hot-spot operators, Dayton said. His company announced last week that it had entered into an agreement with Salt Lake City-based STSN Inc., a leading provider of wired and wireless high-speed Internet access at hotels and conference centers worldwide, to provide Wi-Fi access to an additional 425 hotels.

For its part, Intel is extending Wi-Fi into its own facilities.

Otellini told conference attendees that his company intends to roll out WLANs in all of its new buildings. "It's the cheapest way of connecting," he said.

About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached at john@watersworks.com.

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