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The story behind Wi-Fi

NetGear CEO Patrick Lo says Wi-Fi's sudden popularity is part of bigger changes transforming the computer industry.

When he hears some people fret over the future of wireless networking and hot-spot service, NetGear CEO Patrick Lo can't understand all the fuss.

Some of the details may have been different, but Lo recalls that similar concerns surfaced when automatic teller machines debuted. In his mind, it's just a matter of time before all the pieces fall into place for Wi-Fi.

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Even as Wi-Fi moves beyond the early adopter set, questions linger about price, security and service. Lo's answer is that gear manufacturers and chipmakers will come up with faster, less expensive and more capable products, a trend he says will lead to the integration of wireless technology in every new device. Lo also sees a market for retrofitting older devices, such as TVs and radios, with Wi-Fi capabilities. He spoke with CNET, offering a hardware maker's perspective on the industry's march toward an untethered future and what it will mean to users.

NetGear is a networking company that sells everything from switches to networking power plugs. But Wi-Fi is getting the attention these days. How significant is it to your business?
In the next 18 to 24 months, it will probably permeate 60 to 70 percent of our products.

How are things changing on the ground?
When Wi-Fi first started, it was just about cards that plugged into your PC and then access points. Then Wi-Fi moved into routers, firewalls and switches. It will become a standard feature. You used to have to pay extra for an Ethernet card, a 56K modem, a DVD drive. Over the years, all of those things became standard features that came with a PC. The same will happen with Wi-Fi. Eventually all digital devices will have to be connected to the Internet. We're talking about MP3 players, basically anything with digital media, whose use is growing every day.

How do you see the sequence unfolding?
All PCs need to be able to be connected to the Internet--either through a wired or wireless means. We're pretty far along already. Today you practically cannot buy a PC--unless you want something really dirt cheap, and even then you have to make an effort to find one of those--that does not have a wired connection to the Internet. Now the wave is starting to outfit every PC with a wireless connection to the Internet as well. That's where the revolution is starting.

So it starts off with the PC and then it will move onto other devices. As an equipment maker, are you looking at those other opportunities?
Absolutely. For example, today we provide Wi-Fi connections both to a PC as well as to a PDA, and you're starting to see PDAs with Wi-Fi built in. That's a trend (integrating Wi-Fi into devices) that is going to be accelerated. And then naturally we do a lot of business retrofitting installed PDAs and installed PCs.

There are two things we think are going to happen. The newer digital devices--I've already seen some models like high-definition digital

Wi-Fi became big over the last 18 months because the price dropped.
TVs in Japan--will come with Wi-Fi. You could see it because you know TV and cable are going digital so you know those are going to have Wi-Fi built in. That can similarly be said for Internet radios, which are digital devices that not only can receive broadcast channels, they can also receive digital channels from the Internet. This is a new generation of digital devices, which will come with built-in Wi-Fi.

But again, there's a huge retrofit market. You could retrofit back for digital devices, such as gaming consoles, TVs and ordinary radios, using a digital media adapter so you can retrofit the old analog devices to connect to the Internet. We believe that will become big next year.

What do you think is responsible for Wi-Fi becoming so popular, so fast?
Wireless has always been the preferred choice for connections because it's flexible and easy to install. The phone is a good example. The phone started off wired, but now most people have a cordless phone in their home. People don't just sit around. They move around and you want to connect with people that move around, so you must have a way of connecting flexibility to a moving subject. What prevented it from happening earlier was technology and price.

And why now?
Wireless LANs have been around for 20 years but did not become big until it got easy to use and affordable, just like with PCs. Wi-Fi became big over the last 18 months because the price dropped. That's because chip prices came down as makers came up to challenge Lucent, which was the main Wi-Fi source. Two and a half years ago, Intersil entered the market, and that's when a second source of chips became available. Then, of course, many others entered and prices dropped. The second reason is Wi-Fi finally became easy to use because system vendors like us and our worthy competitor Linksys made the set up of Wi-Fi easy. So when the two converged, things just took off.

That is a good history of Wi-Fi, but what's the future?
We need to focus on ease of use and the continued increase in the price performance curve. That doesn't necessarily mean dropping the price all the time because you get to a point where that isn't possible anymore. But you can improve what it does. Wi-Fi is evolving from "b" to "g" to "super g," so from 11 megabits to 54 megabits to 108 megabits per second. But that's not the end of it--you will continue to see higher speeds and more features.

One popular theory is that the more devices out there, the greater the possibility for hot-spot service to take off. What's your take?

Hot spots are the best thing on earth. The question is whether people willing to pay for that service.
Hot spots are the best thing on earth. The question is whether people willing to pay for that service. Psychologically, it will be difficult for people to get over the hump in terms of paying for it. People must continue to experiment to figure out what is the right model for getting people to pay.

I like to compare them to ATMs. People said, "Why should I pay to get my own money?" It was ridiculous, and the banks, 20 years ago, realized you just can't be competitive without ATM service. So over the years banks changed their views on ATMs. They were free, and then they charged for them, and then they were free again.

Now banks look at ATMs as a necessary customer-enhancing service to attract and retain customers, while other people are willing to spend $20,000 to $30,000 for a machine so they can to stick it in a grocery store and make a killing on charging fees. The industry found equilibrium, where ATMs would be a customer retention tool for some, while in other places people charged.

And you see the parallel with hot spots?
It's the same scenario. The industry just has to find the right balance to get there. Along the way there will be those that can't hit it and fold and others that will hit it and survive. It's just like e-commerce. Some people asked, who can make money out of e-commerce? Guess what? Some people did, and there were a lot of companies that ended up as road kill along the way.