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Intersil may jumpstart a price war

Industry analysts smell a price war brewing among makers of 802.11a chips. Will Intersil start things shaking?

Emerging competition could spark a price war in the market for popular 802.11a equipment, industry analysts said Wednesday.

Intersil announced Wednesday that it is developing 802.11a chipsets and plans to charge manufacturers less for the product than the only other 802.11a chipmaker, .

Intersil is looking at a price range of $20 to $25 per chip, said spokesman Ron Paciello. Atheros charges between $25 and $30 for its chips, used to make wireless networking equipment based on the 802.11a standard.

"We're going to be the lowest priced," Paciello said.

An Atheros representative couldn't be reached for comment. Navin Sabharwal, a wireless analyst with ABI Research, believes Atheros will likely respond to Intersil's move by slashing prices.

"I can't imagine that Atheros won't match Intersil's latest prices," Sabharwal said. As prices drop, manufacturers won't have to spend as much to make equipment and can sell a finished product at a lower price, Sabharwal said.

Companies such as , and Cisco sell laptop modems for around $100 to $125. An access point, or device that is used to create a wireless broadband zone, often costs between $200 and $250.

Wireless 802.11a networks are five times faster than the many networks found in homes, offices and stores based on the Wi-Fi standard, or 802.11b.

A similar price war over the past two years has helped slash the cost of 802.11b laptop modems and access points. Chipsets for 802.11b devices were originally priced from $25 to $30; now prices fall in the $15 to $17 range. Also, prices for 802.11b laptop modems were cut in half as a result of the wars, to around $50.

Prices for 802.11b access points also fell from more than $200 to between $100 and $125.

"The (802.11a) price competition hasn't been there; there has only been one supplier," Sabharwal said. "Now that Intersil is on board, you'll see lower prices."

Sabharwal said he thinks 802.11a access points could drop to a "sub-$200 level" by early 2003, about the time Intersil expects the first equipment using its chips to debut. The cost of 802.11a laptop modem cards will likely drop to between $75 to $80, he said.

For now, most major manufacturers 802.11a networks will find greater acceptance in businesses and in future digital homes, where PCs will be used as a hub to connect a range of devices, from TVs to stereos.

The standard has a few advantages over 802.11b. Chiefly, an 802.11a network offers better security features, a top concern among businesses. It can also handle more users simultaneously and is faster. However, 802.11a equipment doesn't work on 802.11b networks. For example, a person with an 802.11a card in his or her laptop cannot access a home network using an 802.11b base station.