Bluetooth nears maturity, creating significant startup opportunities.
redherring.com
By Justin Hibbard
From the December 04, 2000 issue
Never buy a cable again! Connect your cell phone to any device in the world! Monitor your invalid grandmother's heart rate from the office!
That's just a sample of the breathless claims made about Bluetooth, the short-range wireless protocol with the flashy name. Usually such hype is a sure sign that a technology initiative is marketing rubbish. But the sheer number of companies -- over 2,000 at last count -- that have devoted engineers, intellectual property, and, most importantly, cash to developing Bluetooth can't be easily dismissed. Heavyweights like IBM (NYSE: IBM), Intel (Nasdaq: INTC), Ericsson (Nasdaq: ERICY), and Microsoft (Nasdaq: MSFT) have contributed over 300 engineers to the effort at a cost of roughly $50 million a year.
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TOOTH PICK
"You have to pay attention to where the money's being spent, and it really seems to be going toward Bluetooth," says Eric Janszen, a partner at the venture capital firm Osborn Capital. In September, Osborn and St. Paul Ventures provided $5 million in seed money to Bluesocket, a Bluetooth software startup. By installing Bluesocket's software on a corporate network and hanging Bluetooth transmitters at 30-foot intervals throughout an office building, a company can keep employees' Bluetooth devices connected to the network as they roam.
Bluesocket is hedging its bets by making sure its software supports 802.11 as well. But as its name implies, it's putting most of its money on Bluetooth -- even though the technology has barely dented the corporate market. "We, along with hundreds of other companies, are going to provide the applications that drive Bluetooth deployments," says Bluesocket's founder, David Crosbie, who previously cofounded Adero and Sitara Networks, both privately held, venture-backed companies.
Bluesocket is part of the second generation of Bluetooth-focused startups. The first generation was dominated by chipmakers, two of which, Innovent and Pivotal Technologies, were snatched up earlier this year by Broadcom (Nasdaq: BRCM) for $440 million and $250 million, respectively. At least a half-dozen Bluetooth chipmakers remain independent, including Cambridge Silicon Radio and Silicon Wave. Companies that make the Bluetooth protocol stack -- basic software for Bluetooth devices -- were also in the first generation. Widcomm and EXTENDED SYSTEMS are exemplary companies in that field.
THIS YEAR'S CLASS
Like Bluesocket, the second generation is focused on applications. Take SynchroPoint Wireless, a Canadian concern that has raised $1.7 million in seed funding from GrowthWorks Capital, PricewaterhouseCoopers, and angel investors. The company makes collaboration software for corporate Bluetooth networks, allowing teams to share documents and synchronize data between laptops and handhelds. Also among second-generation startups are so-called Bluetooth Internet service providers. These seed-stage companies, like Nomad Networks and Cerulic, are putting wireless networks in airport lounges to give business travelers Internet access on Bluetooth devices. Even more forward-thinking startups like RegiSoft in Israel are developing technology that lets Bluetooth gadgets make electronic payments.
"It's an appropriate time to get into Bluetooth applications and services companies," says Bill Harris, a board member at Intuit (Nasdaq: INTU) and an investor in Cerulic. "So much has been done in the Bluetooth SIG to develop the standard and get a huge number of vendors lined up. The building blocks look like they're coming together. Now what are we going to do with them?" |
