Posted on Mon, Nov. 10, 2003
Mobile power: Valley could still have key wireless role
By Dean Takahashi
Mercury News
The conventional wisdom is that Silicon Valley missed the boat on wireless.
None of the big wireless carriers is based here. Europe and Asia are rolling out cell phone innovations at a much faster rate. Ecosystems of wireless companies have grown up in Scandinavia, thanks to the success of cell-phone giants Nokia and Ericsson. Dallas has Texas Instruments, the biggest maker of chips for cell phones. San Diego boasts wireless chip maker Qualcomm.
But while the valley hasn't yet had a blockbuster wireless success, it could make some important contributions to the wireless future. So much venture capital has poured into wireless companies here that observers believe that the region is poised to be a player in a wide range of wireless technologies.
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Gerry Purdy, an analyst at Mobile Trax in Cupertino and a partner at Diamondhead Ventures, says that wireless is just in the first inning of the baseball game in terms of its growth. One way of judging its progress is by venture activity. In the third quarter, wireless start-ups commanded about 9 percent of the venture capital raised by Silicon Valley start-ups, up from 3 percent a year earlier, according to the MoneyTree Survey, a quarterly venture capital study by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association.
``People used to ask why on Earth would Silicon Valley have much to contribute to wireless,'' said Jean-Marc Frangos, who offers an outsider's perspective of the valley as chief technology officer of British Telecom's BT Group. ``But the valley is a hot place to be for wireless. The nuclear winter of the downturn is behind us. There are plenty of deals happening.''
Frangos thinks the valley will do well in technologies that combine different networks, offering conveniences like the ability to check e-mail, voice mail and pages on one device. He points to companies like Kineto Wireless, a start-up in Milpitas that takes a call initiated on a cell phone and completes it more inexpensively by sending it out over the Internet on a phone line.
``Wireless will be a critical next wave for the valley,'' said Lucian Hughes, associate partner at Accenture's research lab in Palo Alto, which is looking into ways to put radio sensors in just about everything. ``Wireless is our way to take the Internet to the real world, like delivery truck drivers or sensors that detect leaks on oil pipelines.''
Pulling in the dough
The numbers back up such assertions: 408 wireless companies have raised $3.5 billion in the past three years in the United States, according to the MoneyTree Survey. Of those, 124 wireless firms in Silicon Valley raised $1.1 billion. And within the valley, the wireless sector ranks No. 3 in money raised, behind only software and networking.
Those numbers don't take into account the fact that major companies like Hewlett-Packard, Intel and Cisco Systems are all steering a major part of their research and development into wireless projects, said Rajeev Chand, an analyst for investment bank Rutberg & Co. in San Francisco.
``We believe there's an uptick in wireless venture funding,'' he said. ``And contrary to popular opinion, the valley has a lot of experienced entrepreneurs, venture capitalists and investors in this area.''
In some sense, the valley's competence in wireless is masked by its prowess in so many other areas. Tim Bajarin, analyst at Creative Strategies International in Campbell, says wireless will be big, but it may wind up being just one engine of growth, alongside industries like nanotechnology and biotech. |
