The Commercial Market

Next-generation Applications Drive Bluetooth Adoption

On the edge of mass-market adoption, it is apparent that Bluetooth is evolving beyond its original cable replacement beginnings. A new study by Frost & Sullivan, the international marketing consulting company, observes and analyzes the evolution of both the standard and the technology with its environment.

The road to progress has been a rocky one for Bluetooth, with industry hype exceeding reality and inflating expectations during the early years of the technology's development, culminating in a media backlash in 2001 as Bluetooth failed to meet its promises. Now the standard appears to have settled with the technology moving from vision to commercial reality, blossoming into a number of active application markets.

Major milestones achieved in 2001 include the ratification of the Bluetooth 1.1 specification, ending years of revisions and non-interoperable intermediate specifications. Bluetooth products were very slow to emerge from the labs, but last year saw a flock of Bluetooth-enabled products finally hit the shelves. The first high profile public trials, conducted by companies such as the UK's Netario and Japanese trading company Marubeni, also began in 2001.

"Technological inroads into client devices, such as convergence of communications and computing equipment, the creation of wireless data services and models, and the availability of complementary technologies, are defining the boundaries of Bluetooth's contribution to wireless technology," reports Michael Wall, wireless research analyst at Frost & Sullivan.

Four prominent elements of the Bluetooth value chain, namely platform and infrastructure providers, operating system developers, software application developers and service providers, are opening up the opportunities associated with the technology, in order to develop new applications and usage models.

Although these changes have been partly responsible for the perceived delay to the technology, they also mean that Bluetooth has grown in eminence. Even in the unlikely event of Bluetooth failing to achieve the mass-market penetration predicted, it still has many roles to play in niche applications.

Platforms and infrastructures represent the physical hardware and software that enable Bluetooth networking within the local and personal areas. This area is growing with the move of Bluetooth away from simple cable replacement into more formalized networking applications. Although Bluetooth will never be an effective replacement or serious competitor to cellular technologies or to wireless local area networking (LAN) infrastructure, it can doubtlessly act as a substitute in certain environments.

Service providers' endeavor are geared towards the development of wireless services that can be operated across Bluetooth networks, providing client device access to applications such as e-mail, Internet, personal information management (PIM), as well as formalized file sharing and synchronization to remote devices. Away from these generic applications, service providers are examining the opportunity to provide niche or proprietary services to enterprise clients or clients operating in vertical markets with particular demands. Service providers are seeking to marry the client device function of Bluetooth with the platforms and infrastructures being developed to provide services beyond the simple peer-to-peer cable replacement offered by client device only Bluetooth connections.

For further information, contact Kristina Menzefricke at kristina.menzefricke@frost.com.

US MEMS Industry Experiencing Dramatic Growth, Change

A new report issued by the MEMS Industry Group (MIG), the trade association representing the US Microelectromechanical Systems (MEMS) and Microstructures industries, shows the nation's MEMS industry is growing at an exponential rate, creating scores of new businesses, increasing employment and diversifying applications into new industry sectors.

The report released at MEMS 2002, the 15th annual IEEE International Conference on Microelectromechanical Systems, is the first comprehensive review of economic and other indicators about the MEMS industry. The report also provides a roadmap for the industry's continued growth and the future commercialization of MEMS technologies.

"The US MEMS industry is experiencing phenomenal growth, change and success," said Ken Gabriel, MIG founding co-director and professor of electrical & computer engineering at the Robotic Institute at Carnegie Mellon University. "MEMS will soon contribute to every aspect of our daily life, from palm-sized high definition projection displays to grain-of-rice size implantable medical devices. It's important for key stakeholders - developers, engineers, investors and customers - to understand the current state of the MEMS industry and to have a roadmap for navigating the numerous business and technological opportunities that are emerging from the advances of MEMS and microstructure technologies.

The report contains a variety of indicators about the current state of the MEMS industry and projections for growth, including:

  • In 2000, MEMS was estimated to be a $2 to 5 B industry.
  • By 2004, MEMS is estimated to be an $8 to 15 B industry.
  • There are an estimated 1.6 MEMS devices per person today in the US. By 2004, that number is expected to grow to nearly five per person, a compound annual growth rate of 45 percent.
  • Over 40 percent of MEMS companies were founded between 1995 and 2001, with an average of 10 companies per year founded in the past 3 years.
  • Employment growth in the MEMS industry has exploded; the level of employment in 2001 was 30 times greater than in 1985.
  • The West Coast hosts 45 percent of MEMS companies, the majority of which are in California; the Northeast hosts close to 30 percent.

The full report can be ordered via http://www. memsindustrygroup.org.

Time to Jump Back on the Broadband Wagon?

In a matter of months, the bright future facing many broadband service providers seemed to disappear in 2001. Provider after provider either filed for Chapter 11 protection, cut back investments or simply went out of business. So far, 2002 might prove to be a much happier chapter in the evolution of the telecommunication industry. As 2001 came to a bitter-sweet close, a couple of players from the "Chapter 11 Club" targeting small and mid-size businesses, managed to deal themselves back into the game.

Covad Communications Group Inc. announced that its four-month stint with Chapter 11 restructuring was over, according to a December 20 press release. In a bit more than a quarter, the company managed to eliminate $1.4 B in bond holder debt, thanks to good "future" planning, negotiating and, most importantly, funding from SBC, a 5 percent stake holder. In a similar vein, Winstar, a much-publicized member of the "Chapter 11 Club," was scooped up by IDT Corp., a budding multi-national carrier backed by Liberty Media and AT&T. The combination of Winstar's fixed wireless assets and IDT's long haul capabilities suggest the resulting combination also has a bright future.

The fittest providers (and/or those with the most money) have survived the hailstorm of 2001 and are ready to feed the masses of business customers clamoring for the robust, affordable connections to the "network." Actually, In-stat research suggest that broadband connectivity will be a key priority for many firms in 2002, providing service providers with growing market opportunities this year and certainly beyond. According to a November 2001 survey of more than 1200 decision makers across size of business, roughly 48 percent see broadband as a key area of investment for this year. Interestingly, the other top priorities for this year are all enhanced or enabled broadband connectivity: investment in "systems" (59 percent), "networking" (54 percent), "Internet strategies" (52 percent) and "connecting remote workers" (52 percent).