Remote Net access untapped content, hardware niche
By Jeffry Bartash, CBS MarketWatch
Last Update: 3:22 PM ET Feb 8, 1999
Silicon Stocks
Tech Report
NEW ORLEANS (CBS.MW) -- First came traditional phone carriers.
Then cable TV companies, with their big, thick wires into the home,
joined the fray. And now wireless operators and equipment makers are
getting into the act.
The goal: providing high-speed Internet access.
As the wireless industry convenes for a big
powwow in New Orleans Monday, a slew of
telecom concerns unveiled plans aimed at
capturing a share of what industry analysts believe
is a large, if mostly untapped, market. Some
prominent names: Cisco Systems, Motorola,
Nextel Communications, Netscape
Communications and, of course, the ubiquitous
software behemoth Microsoft.
Leading the way Monday was data networker
Cisco and wireless phone maker Motorola, who announced plans to
spend $1 billion over the next five years to develop wireless Internet
access products and standards. Neither company is strong in those areas
now, and they do not want to get left in the dust by rivals or miss out on a
potential bonanza.
The companies say national wireless providers such as Sprint (FON) and
Nextel Communications have encouraged their alliance. Shares of Cisco
(CSCO) fell 1 1/8 to 100, while Motorola (MOT) rose 1 1/2 to 67
15/16.
Spreading their bets
Nextel is not standing pat, however. The company also announced
Monday it will work with Motorola and Netscape to provide wireless
Internet access. Motorola will supply specially designed phones, Nextel
the network and Netscape a customizable portal for wireless users.
Unwired Planet, a privately held Silicon Valley concern, will provide its
micro-browsing technology for wireless phones.
The service, called Nextel Online, is expected to
become widely available in 2000. "This is a giant
step for Nextel and the first step for the industry in
bringing about the convergence between mobile
voice and data services with the Internet," said
CEO Dan Akerson.
Shares of Nextel (NXTL) climbed 1 27/32 to 32
1/8. Netscape (NSCP) fell 2 to 67 7/16.
Like Nextel and other telecom companies, Cisco
is spreading its bets and pursuing other alliances.
On Monday, the world's largest maker of data networking equipment said
it will team up with Qualcomm to provide high-speed wireless access over
the network of Baby Bell US West (USW). Qualcomm is the creator of
the CDMA -- or code division multiple access -- standard for the
transmission of digital wireless information.
"With the rapidly growing demand for high-speed Internet access from
home, the office and on the road," said Jeffrey A. Jacobs, Qualcomm vice
president of corporate business development, the service will provide fast,
affordable access "for market segments that may be difficult or expensive
to reach via traditional operator or cable networks." See press release.
Qualcomm (QCOM) shares rose 1 7/16 to 68 1/2.
Qualcomm has already shacked up with Microsoft
to develop services for U.S. business customers in
a venture called Wireless Knowledge. The
software giant, for its part, aims to ensure that its
operating software becomes the standard for
Internet-ready wireless phones.
Broadening its reach, Microsoft is also expected to
announce Monday that it will work with British
Telecommunications (BT) to offer similar Internet
services to global customers. Microsoft is trying to
fend off a challenge from Ericsson (ERICY),
Motorola and Nokia (NOK.A), which planning to
offer a wireless service based on an operating
system provided by the British firm Psion.
Future not here yet
Despite the trumpeting and loud pronouncements,
Internet-ready wireless phones might have limited uses. The screens on
such phones are too small to allow for easy reading of large files, and may
be better suited for niche tasks such as reading email or accessing phone
numbers and addresses. Alternatively, phones could also act as modems
and be attached to laptops, giving wireless service more appeal.
Telecom companies, moreover, have a lot more work to do before large
numbers of users start hooking up to the Internet from the pool or beach.
Developers have to improve phones and laptop modems, agree to
common standards, boost speeds and ratchet down costs, which could
take two years or more. Wireless Internet technology and services have
existed for several years, but have been held back by clunky technology
and low download speeds.
Consider Metricom (MCOM), a small Los Gatos, Calif.-based company
nearly half owned by Microsoft co-founder and venture capitalist Paul
Allen. The company has offered wireless Internet in San Francisco,
Washington, DC and a few other markets since the early 1990s, but only
has about 26,000 customers.
Though monthly rates are cheap, the initial laptop modems were the size
of a walkie-talkie and speeds have mostly been limited to 28.8K. The
company is now selling sleeker modems and promising faster speeds, but
management put itself on the auction block last fall.
In any event, analysts don't believe wireless will supplant wired carriers,
with their larger capacity and far greater speeds, as the dominant provider
of Internet access. Still, they say the potential for wireless is quite sizable.
Research firm Dataquest, for example, estimates revenue for such services
could soar to $3 billion by 2003 from about $460 million in 1999.
"The tethered world has really slowed people down," Cisco Executive
Vice President Don Listwin said during a conference call. |
