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Wireless market bracing for boom

The U.S. corporate wireless communications market is expected increase by 220 percent over the next four years, driven by increased demand among medium-sized businesses, according to a new study.

The U.S. corporate wireless communications market is expected to increase by 220 percent over the next four years, driven by increased demand among medium-sized businesses, according to a new study.

The domestic wireless market, including services and equipment, will be valued at $117 billion by 2002, according to Cahners In-Stat Group, a technology market research firm.

Medium-sized businesses--companies with between 100 and 1,000 employees-- will account for $62 billion in sales within four years. Today, the mid-sized corporate market is a $29 billion business.

"Technology always starts with the high margin sales in the enterprise," said Kneko Burney, an analyst at Cahners. "The next step is to move into the middle market."

Moves in the middle market, representing about 85,000 businesses in the United States, typically trails large corporate trends by a couple years. So mid-sized companies are just now utilizing wireless for cost savings and a competitive advantage, Burney said.

Wireless spending among large corporations--companies with more than 1,000 employees--will grow to $65 billion by 2002, up from $27 billion in 1998.

Several key factors, including a growing wireless user base and reallocation of telecommunications budgets to wireless spending, will account for the industry's expected growth, the study found.

Despite the expected boom in corporate wireless usage, other analysts said small offices will, out of necessity, continue to outpace larger businesses in terms of wireless usage.

"We've found small business users use wireless a lot because they need to be reachable. It's vital to their business," said Julie Rietman, a wireless analyst for International Data Corporation.

But Cahner's Burney said small business users don't represent the same money-making opportunity.

IDC predicts a 12.1 percent grow rate among medium and large businesses by 2002, lower than the 17 percent compound growth rate Cahners anticipates.

The expected wireless explosion has not been lost on today's industry leaders.

AirTouch Communications was acquired by Vodafone Group earlier this month. The merger makes the company the largest wireless service provider in the world.

The combined companies appear committed to forging an alliance with Bell Atlantic to expand their market share domestically.

Many other companies are banking on a spike in wireless use for data applications.

Palm Computing's next generation PalmPilot will support advanced wireless services.

Microsoft and Qualcomm formed a joint venture known as WirelessKnowledge. The new company is expected to offer low-cost data solutions.