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Bye-bye, Bluetooth

Bill Gurley explains why this much-ballyhooed technology standard for connecting mobile devices will ultimately fail to be relevant.

It's just a fact of life
That no ones cares to mention
She wasn't good
But she had good intentions

--Lyle Lovett

It is time to say goodbye to Bluetooth, the much-marketed and much-mentioned technology standard for connecting mobile devices to one another.

Such a drastic statement is likely to draw criticism, especially from those still hard at work on Bluetooth-related products. However, think of it this way--if this article leads toward an earlier termination of those efforts than would have happened through natural evolution, you are probably better off.

Bluetooth will fail to be relevant.

For those of you who don't know, Bluetooth is a three-year effort of the technology industry to standardize a compatible wireless "PLAN" solution. PLANs, which stands for Personal Local Area Networks, are a wireless replacement for the cable that you have to use to connect your PDA, cell phone, MP3 player, or digital camera to your PC. Some have also marketed this as a broader solution to connect devices to printers and to serve as complete wireless Internet connections. Others are working on voice-based paging systems built around Bluetooth.

But I come here to bury Bluetooth, not to praise it. Believe it or not, this is not an emotional perspective; it's simply that the current odds are stacked heavily against this well-meaning standard. And while many Bluetooth loyalists are likely screaming something similar to the old man's line in Monty Python and the Holy Grail, "I'm not dead yet!"--it is time to begin penning the eulogy.

One should not be too surprised to see Bluetooth fail. The history of well-organized and heavily marketed standards taking over the world is fleeting. In fact, more often than not, the standards that really change the world sneak up on us from the outside. Something like TCP/IP (a 20-year sneak!) becomes the foundation of the Information Superhighway, while the cable industry strings together proprietary networks in Orlando. Perhaps it is God's way of voicing displeasure with the oligopolistic practice of corporate cooperation. Remember the Microsoft killer Taligent?

Of course, mentioning Taligent is a cheap shot. The real problem with Bluetooth is the rising stardom of the 802.11b wireless Ethernet standard. Not originally planned as a competitor to Bluetooth, 802.11 is progressing at such a frantic pace that it is leaving others in its wake.

As a wireless standard, it has two key technical advantages over Bluetooth: It is ten times faster, and has about ten times the distance range, at about the same cost. Of course, the Bluetooth bigots will suggest that they are intended to serve different needs; however, this squarely relegates Bluetooth to a "cable replacement" technology--a topic we will discuss in more detail later.

The real problem is that 802.11 is caught in an upward spiral of increasing returns. As the first player out of the gate, this technology is enjoying all the benefits typically awarded a first-mover. As volumes skyrocket, costs decline. As costs decline, the number of applications the technology can serve naturally increases. As this potential application universe expands, other solutions meet an early grave. Such will be the case with Bluetooth.

Ironically, the same upward spiral that lifts 802.11 has a corresponding negative spiral that will ensure Bluetooth's demise. Search the Web for recent articles on Bluetooth, and you will notice a common theme: defensiveness. "Don't Write Off Bluetooth," "Wireless Ethernet: Neither Bitten nor Blue," and "Bluetooth Still Teething" are three such articles.

You see, the Bluetooth community is already on its heels, and it's hard to play offense when you are constantly playing defense. Microsoft announced a few months back that it would drop Bluetooth support from its upcoming Windows XP OS release, despite rousing support for 802.11. It must feel like standing in quicksand.

Even without 802.11 competition, Bluetooth has its challenges. The bottom line is that the concept of a PLAN is flawed from the onset. A "cable replacement" is simply not needed, as the cable itself was on the verge of obsolescence. In a world where every device is connected to a single network (read: Internet), there is no need to connect individual devices on an ad hoc basis. With 802.11 networks popping up everywhere, it is highly likely your IT department will adopt 802.11, and so will your PDA vendor.

Even without competition from 802.11, Bluetooth would have major challenges. That's because the very concept of a cable replacement like Bluetooth is flawed. In a world where every device is connected to a single network (read: Internet), there is no need to connect individual devices on an ad hoc basis.

Consider this--a walkie-talkie is a device that supports communication directly between two nodes. A cell phone is a device that supports communication between "any" two nodes because they are all connected to a common network and they all have unique addresses. Bluetooth is akin to a walkie-talkie, whereas 802.11 connected to the Internet is more analogous to the cell phone model. Obviously the cell phone has a much higher value proposition than the walkie-talkie.

Think of it this way--why do I want to synchronize two products via a cable? I likely have phone numbers on my computer that I want to put in my PDA or cell phone. Or I want to synchronize my calendar or e-mail. One device does this already-RIM's Blackberry pager. Ironically, most of the real power users of RIM do not sync through a cable, they sync through the network. RIM supports an add-on to Exchange server that recognizes changes to e-mail (and more recently the calendar) and pushes these changes out across the Internet to the connected device.

This is a much more elegant solution than the PLAN. For starters, if you store data in a network as opposed to on a single device, you are much better prepared to deal with failure of that device. There is always an archive on the network. Second, if others need access to the same data (for instance, your assistant), having a centralized copy that everyone can access makes much more sense. This works great with Blackberry, as your administrative assistant can update a calendar change on the fly, and your PDA is updated in real time. Of course, if you insist on a direct desktop-to-PDA update, this can be done across the LAN through 802.11 (or even directly, with the right software change).

Last week, Motorola released the Timeport 270c, a Bluetooth-compatible phone. However, if you wish to wirelessly connect this to your desktop, you need to purchase the $299 Bluetooth connectivity kit with Bluetooth Smart Module (to plug into the phone) and a Bluetooth PC card (for the notebook).

Seems like a lot of work to replace a cable.

J. William Gurley 2001. All rights reserved. Above the Crowd is a monthly publication focusing on the evolution and economics of high-technology business and strategy. This column can also be found on CNET online and in Fortune magazine. The information contained herein has been obtained from sources believed to be reliable but is not necessarily complete, and its accuracy cannot be guaranteed. Any opinions expressed herein are subject to change without notice. The author is a general partner of Benchmark Capital, a venture capital firm in Menlo Park, Calif. Benchmark Capital and its affiliated companies and/or individals may, from time to time, have positions in the securities discussed herein. ABOVE THE CROWD is a service mark of J. William Gurley.