June 23, 2003, 12:00 AM

Wi-fi is entering the technology-hype phase, IDC warns

Wi-fi has been the focus of a lot of interest lately. But researchers IDC caution that much of the publicity is the familiar early-phase technology hype and that wi-fi providers are only building the infrastructure right now.

 

The topic of wi-fi--wireless fidelity that lets users with properly equipped laptops or handhelds access the Internet through wireless connections in public places--has been the focus of a lot of interest lately. But researchers IDC caution that much of the publicity is the familiar early-phase technology hype and that wi-fi providers are only building the infrastructure right now.

“Early growth figures, achieved from a very low baseline, represent little more than the creation of a hotspot infrastructure. Building a functional network offering that attracts and retains subscribers over the long term will prove to be far more difficult than today’s wi-fi hype admits,” IDC says in its new report “Worldwide Hotspot Forecast, 2002-2007.”

Retailers and other operators of public spaces have been setting up what are known as hotspots where users can access the Internet from wireless devices, sometimes for a fee and sometimes for free. “In many respects, the hotspot market feels like another technology gold rush,” says Keith Waryas, research manager for IDC’s Wireless Business Network Services program. “What we’re hearing right now are the promises of fame and fortune typical of an early deployment phase. It is imperative to remember that this market is still exceptionally young and rife with uncertainty. Most business models are not yet proven, or even solidified, and the competitive landscape is still very unclear. The hard work needed to achieve wi-fi’s promise still lies ahead.”

IDC expects the hotspot market to evolve through two years of massive network expansion followed by three years of relationship building among carriers, network operators, and service providers. IDC says the first phase will be characterized by dramatic growth in the number of hotspots and hotspot users, with the number of commercial hotspots increasing at a compound annual growth rate of 57% while the number of worldwide hotspot users will approach 25 million. IDC expects revenue to increase 143% and users 112% annually over the next five years.

“One consequence of a rapid build-out is that many public access points will be underutilized because they weren’t deployed in a thoughtful manner,” the IDC report says. “This will be further complicated by the evolution of usage patterns, pricing tolerances, and service expectations among users.”

 

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