Can Bluetooth compete with WLAN?
individual.com
May 7, 2001
Mattias Ringqvist and Will Daugherty, McKinsey &
Company
COMMENTARY--Much debate is brewing over
whether Bluetooth will replace WLAN standards
like 802.11b. Yet, how can a technology, initially
developed for cable replacement, be seen as a
threat to a Wireless LAN technology? Our
perspective is that, in most cases, it will not be a
threat.
In fact, Bluetooth is delayed by at least a year,
primarily due to a delay by manufacturers in getting
products to market. In the meantime, 802.11b is
gaining strong momentum as the WLAN standard.
Realistically, the Bluetooth industry should focus on
developing applications to take advantage of this
superior cable replacement technology that will
eventually be embedded in hundreds of millions of
handheld devices.
Common wisdom in favor of Bluetooth
Bluetooth is a low cost, low power, robust wireless
connection method with a small footprint that
makes it very well suited for millions of handheld
devices. Some common early assumptions favoring
Bluetooth include:
* The price of a Bluetooth chipset, excluding
application interface software, is expected to drop
from $20 to $5 by 2003.
* A Bluetooth chip, designed to communicate in the
10m range, consumes only 1mW of power,
compared to an 802.11b chip, which consumes
more than 1W. A single Bluetooth chipset is also
fairly small, with a size of 8x8mm, compared to the
smallest 802.11b at 30x14mm.
* Bluetooth and WLAN use the same frequency,
2.4GHz. However, given Bluetooth is designed to
be a very robust technology that changes
frequency at the speed of 1600 hops/second, it has
an advantage over WLAN technologies like
802.11b.
* Bluetooth is expected to have a very large reach
this year with installation in more than 120 million
end user devices, compared to only 4.3 million
WLAN products.
A somewhat different reality
However, not all is what it seems. The predicted
price drop for a Bluetooth chipset is driven by
aggressive forecasts in volumes shipped. Recently
revised volume forecasts of end-user devices
shipped with Bluetooth functionality are in fact only
20-30 million units this year. At the same time, the
cost of a WLAN chip is now, according to some
manufacturers, also expected to fall to around $5
by 2003; competitive with Bluetooth chipsets. In
addition, Bluetooth faces interoperability issues, not
only on the physical layer between different
hardware manufacturers, but also on the
application layer, where so far, few profiles have
been developed or agreed upon.
Several players in the WLAN industry predict a
move to 5GHz by 2004, positioning to avoid
potential Bluetooth interference and reaching
transmission speeds of 24Mbps. Bluetooth only
gives a maximum speed of 721kbps for data,
compared to 11Mbps for 802.11b. Therefore,
streaming video applications, or downloading large
quantities of information from the Internet to a
laptop or PDA, is more likely to happen over a
WLAN connection.
Moreover, Bluetooth was never intended to
become a network technology, and it holds limited
ability to do handoffs between access nodes-an
essential feature to ensure mobility. Several
manufacturers have solved this for data
communication, but real time mobile voice
communication is still being developed.
Finally, with Bluetooth on every laptop,
communication flow could potentially go directly
through the computer without going through the
access node and the corporate firewall,
necessitating an increased need for "personal
firewalls" residing on computers, as they become
access nodes into the corporate Intranet. With
Bluetooth's security standard, only the device is
authenticated and not the user. Therefore,
additional application level security needs to be
implemented to authenticate the user and ensure
secure information flow.
The true Bluetooth advantage
There are some areas where Bluetooth holds an
advantage, voice communication being one. Here,
Bluetooth can be used in a cordless phone within a
10m range, in an office environment or home,
without the need for handoffs. Other WLAN
technologies need voice-over-IP to support voice
communication, which is not likely to happen soon.
However, rather than trying to replace an already
established wireless LAN technology, the
Bluetooth industry should focus on tapping into the
technology's clear advantages as a cable
replacement technology, and quickly solve some
fundamental challenges, like interoperability,
security, and the need for compelling applications.
Successful companies will develop applications
that take advantage of a cable replacement
technology being embedded in numerous handheld
devices. A good early example of this is Ericsson's
Blip product. Blip is a small, Bluetooth transceiver
that promises, among other things, to send
messages to shoppers in a store or enhance the
information flow from advertising bulletin boards to
potential customers. The product is due for release
this summer for approximately $500.
Soon, Bluetooth functionality will be embedded not
only in our handheld communication devices, but
also in other consumer electronic devices, like
MP3 players, digital cameras, and gaming devices.
At first, such devices will be enabled through
add-on Bluetooth packages connecting through a
connector or expansion bay, like the USB-port or
PCMCIA-slot. However, the technology will
eventually be embedded in the device itself.
Imagine a scenario where gamers come together,
connect their Gameboys over Bluetooth, instead of
cables, and form multiplayer games. These more
confined solutions are advantageously positioned
to take off first than solutions in an open
environment with resulting interoperability
challenges.
Whatever one might believe about Bluetooth as the
next wireless access technology, successful
players are wise to focus now on developing
compelling end-user applications that primarily
take advantage of this cable replacement feature
embedded in millions of handheld devices.
Mattias Ringqvist
(mattias_ringqvist@mckinsey.com) is a consultant
in the Stockholm Office, with experience from
several European and US telecommunication
engagements. Will Daugherty
(will_daugherty@mckinsey.com) is a partner in
McKinsey & Company's Silicon Valley Office where
he focuses on serving communications technology
companies. Both are leaders in McKinsey's
telecommunications practice and mobile commerce
initiative. |
