PCs to be Intel's wedge into wireless

SAN JOSE, Calif.--Intel is set to release its first chips into the wireless market and plans to use its strength in the PC world to get a head start.

The Santa Clara, Calif.-based chipmaking giant is readying a PC card modem, code-named Calexico, that will contain the first 802.11b and 802.11a chips made by the company.

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The modem, which will come out in notebooks early next year, will let both PCs and notebooks connect to any of the 15 million to 18 million 802.11b, or Wi-Fi, wireless networks as well as to those that use the newer 802.11a standard.

To encourage sales, Intel will also pair the module with its processors and chipsets and sell the entire package to PC manufacturers along with "reference designs," or hardware blueprints, a technique it has used to get into the market for chipsets and other components.

For instance, the company is pairing the module with Banias, a new notebook chip coming in the first half of next year, said Anand Chandrasekher, vice president of Intel's mobile products division.

Intel is qualifying, or extensively testing, Calexico only with Banias. Notebook manufacturers can select 802.11 chips from other manufacturers, but they will have to take the time and money to test how different modems work with Banias on their own.

"We design all of these things to work together," he said. "Next year over 50 percent of the notebooks will be configured with wireless, and 80 percent of the Banias notebooks will have dual-band wireless."

Intel also intends to pair Calexico with its desktop processors and chipsets as well as a series of new "digital hubs" that will let consumers wire their TVs or other consumer electronics products to the Web.

Intel is applying a formula to its wireless strategy that has been a great success in the past. Rather than sell chips alone, Intel can sell a complete package of parts that work together. At one time, the company did not actively manufacture chipsets, but it quickly became one of the largest makers in the world by selling its processors in tandem with its chipsets. It did the same with motherboards.

For PC makers, the motivation to buy the complete bundle of products lay in lower cost. By adopting Intel's blueprint, PC makers could reduce the amount of independent design work they had to perform. Qualification can also be a long, arduous process with little benefit in terms of market differentiation or performance. Plus, by buying more Intel parts, the companies can qualify for volume discounts.

"Intel can sell the collective package of chips at a lower price than they could (sell them) individually, so it is to the manufacturer's financial advantage," said Dean McCarron, principal analyst at Mercury Research.

The push into 802.11 could give the company's communications group a shot in the arm. Formed during the go-go telecom days in the late 1990s, the group has been unprofitable for the last several quarters due to the meltdown in the telecommunications market. Intel has acquired over 30 companies since January 1999, and most have gone into this group.

Chandrasekher added that Intel's wireless chips will also improve a computer's performance. The chips will "power down," or use less energy, when not transmitting or receiving data, thereby lengthening battery life.

Banias is Intel's first chip designed specifically for notebooks. And notebooks using the chip will be the first portables designed almost exclusively for people who regularly use wireless connectivity, said Ketan Bhat, Intel's platform technical marketing manager.

Calexico is Intel's first modem to work on 802.11a and 802.11b networks, he said. Intel already sells an access point that taps into both types of networks, but the internal silicon comes from other companies.

The idea of combining the standards is gaining popularity among most wireless equipment makers. The 802.11a standard creates a much faster network than 802.11b, but it's significantly more expensive. For example, an 802.11a access point can cost more than $2,000; an entire 802.11b network can cost less than $500. Most Wi-Fi equipment makers plan to the two together as a way to avoid sticker shock among potential customers.

Cisco Systems and Proxim are among the companies that have introduced such dual-band products.

"The challenge is bringing (802.11a) into the market," said Mike Trainor, who manages Intel's mobile platform group.