NY Times. Cisco and Motorola to Develop Wireless Internet System (more details)
February 8, 1999
By DAVID BARBOZA
HICAGO -- In what is being billed as the next giant step in the
Internet revolution, the Motorola Corp., the maker of wireless
communications products, and Cisco Systems Inc., which provides
Internet equipment, plan to form an alliance that would build the
world's largest wireless Internet system.
The project is the most ambitious effort yet to build a global network
that would enable businesses and consumers to have high-speed
Internet access to e-mail and faxes without the burden of wires,
cables or even walls.
The plan, which is expected to be announced Monday at a cellular
telephone conference in New Orleans, makes Motorola and Cisco
Systems the latest communications and networking giants to join
forces in an attempt to capitalize on the increasing popularity of the
Internet and the rapid growth of wireless communications products.
Over the last year, several telecommunications companies have
announced plans to offer new services or upgrade their wireless
communications operations so that businesses and consumers may
have some access to the Internet. The AT&T Corp., for instance,
already is offering wireless service that taps into electronic mail and
Internet information.
The race to transform communications through the Internet also has
led to several giant mergers that could result in greater wireless
access. In June, Northern Telecom Ltd. of Canada, one of the largest
makers of telecommunications gear, said it would acquire Bay
Networks Inc., a large data networking company. Just last month,
Lucent Technologies, the former research arm of AT&T, announced
its acquisition of Ascend Communications, a leading provider of
Internet equipment.
Executives at the Microsoft Corp., Apple Computer Inc. and
Qualcomm Inc., the wireless communications outfitter, also have
expressed an interest in developing products related to wireless
Internet access.
"This is part of a trend," said Roberta Wiggins, a wireless
communications analyst at the Yankee Group in Boston. "People have
been saying: 'There are all these people with cell phones and all these
people accessing the Internet, and at some point people are going to
put these two things together."'
While Ms. Wiggins and other analysts say that developing a wireless
system could be costly and cumbersome -- with competing and
incompatible systems trying to transmit bulky data and video into
wireless units -- officials at Motorola and Cisco say their vision of a
world where automobiles could get tuneups by wireless signals and
sales executives could obtain company information from a remote
place is just beyond the horizon.
"This extends the Internet to a world without wires," said Don Listwin,
executive vice president at Cisco, based in San Jose, Calif.
Over the next four or five years, Motorola and Cisco say they plan to
invest more than $1 billion to create a system capable of transmitting
voice, data and video over existing cellular telephone stations directly
to wireless telephones, laptop computers and other devices.
The system would create a new line of products for Motorola, a new
generation of wireless networking gear for Cisco and perhaps even
signal the convergence of several existing communications products,
like pagers, cellular telephones, televisions, radios and computers.
"The goal is that instead of having four or five communication devices
in your briefcase, you'll have one or two," said Doug Wills, a
spokesman for Cisco.
The two companies also plan to open four jount research and
development centers, two in the United States and two abroad.
A critical piece of the puzzle, Motorola and Cisco say, is that the
wireless transmissions would be delivered using an Internet Protocol
platform that is compatible with all wireless formats. Unlike analog or
digital platforms, the companies say that the Internet Protocol, or IP
platform, will be able to effectively deliver and bundle voice, data and
video feeds through cellular stations.
What is novel about the effort, the companies say, is that they plan to
adopt an "open" standard. In other words, they plan to create a
wireless industry standard that could be adopted by any company that
wants to develop different or competing products. Such an open
standard, officials say, would be different from other wireless Internet
efforts now under development. The new IP framework will be
published this spring in a "white paper," the companies said.
For Motorola, which has stumbled of late in the world of wireless
communications, the deal with Cisco is an attempt to help resurrect its
reputation as an innovative company. After two years of earnings
shortfalls and market share losses tied to its line of wireless
telephones, Motorola has been on an aggressive path to new wireless
ventures.
The company, which is based in Schaumburg, Ill., and had sales of
$29 billion in 1998, has a huge stake in Iridium, a satellite venture that
offers voice and paging systems. In May, when sharp cuts were being
made in its work force, Motorola abandoned a plan to spend $13
billion to build what it called its Internet in the Sky project, a satellite
network capable of delivering high-speed data communications
anywhere in the world.
Instead, Motorola said it would invest about $750 million in
Teledesic, a low-orbit satellite venture that also intends to deliver
high-speed access to the Internet, beginning in 2003. The new
wireless venture with Cisco, officials at Motorola say, is different but
would be compatible with Iridium and Teledesic, which was founded
by William H. Gates, the chairman of Microsoft, and Craig McCaw,
the cellular telephone pioneer.
Now, company officials say, they have hit upon a revolutionary
scheme. "With this system you can get Internet information any time,
anywhere," said Bo Hedfors, senior vice president at Motorola.
As for Cisco, executives say the new venture will strengthen its move
into the telecommunications equipment market, where it is battling
companies like Lucent and Nortel. By forming an alliance with
Motorola, Cisco -- which among other things sells networking gear to
telephone providers -- is staking out firmer ground in its efforts to
persuade global companies to use its equipment and the Internet to
transfer information.
Though some analysts insist that Motorola and Cisco face many
hurdles in creating a wireless Internet system, including the prospect
of transmitting bulky video feeds over a wireless network, the two
companies say the framework they have outlined already has won
strong support from big telephone service providers like Sprint,
Nextel and Airtouch Communications.
Related Sites
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Motorola Corp.
Cisco Systems Inc.
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