Start-up aims for A-list status in wireless LANs

Chipmaking start-up Atheros is tuning in to 802.11a, a standard that promises both higher performance than the popular 802.11b technology and lower power consumption.

This summer, the company will begin selling its new wireless kit, called the AR5000. The two-chip package features an on-chip radio and a companion chip for use in wireless corporate networks, commonly known as LANs (local area networks).

Within the next month, Atheros expects to announce a new round of financing and at least five brand-name customers. The funding should be in excess of $50 million, the company said. The company is in discussions with PC companies such as Compaq Computer and Dell Computer, as well as consumer electronics companies such as Sony, sources familiar with its operations said.

Because of competing standards and economic uncertainties, however, the technology could take some time to come of age.

Atheros placed its bets on the relatively uncrowded 802.11a market because the technology is both a competitor and also a likely successor to the 802.11b standard, which is currently popular in wireless LANs. The 802.11a standard differs because it sends data at faster rates and on a less crowded band, the company says.

The 802.11a technology operates on a 5GHz band and has a peak bandwidth of 54mbps (megabits per second), almost five times the 11mbps peak of 802.11b on the crowded 2.4GHz network. Atheros also offers a "turbo" mode with a 72mbps peak bandwidth.

"What we have in our first product is a complete 802.11a wireless LAN chipset," said Mark Bercow, vice president of marketing and business development for Atheros. The Sunnyvale, Calif.-based company expects that its products' prices will be comparable to or below that of current 802.11b wares.

Along the way, though, the company will have to overcome some skepticism.

On the business side, Atheros "can be first to market, but it doesn't have the relationships (with manufacturers) just yet," said Jason Smolek, a research analyst at IDC. In addition, he said, "the big problem is actually going to be, will users adopt (802.11a)"?

On the technology side, many wireless LAN cards are built with a greater number of chips, which in turn use relatively exotic manufacturing technology, such as gallium arsenide.

"People insist that there's no way we can do what we say we can do," Bercow said.

What Atheros says it's done is to create a low-power radio that can be manufactured with standard CMOS (complementary metal-oxide semiconductor) chipmaking technologies. Taiwan Semiconductor Manufacturing, Atheros' manufacturing partner, fabricates the Atheros chips using its 0.25-micron process.

Because it's a two-chip package, Atheros' product consumes less power than a more traditional four-chip package used in wireless LAN products, Bercow said.

Atheros is not without challenge as 802.11a becomes established. The waters become muddier with the advent of competing standards, such as Texas Instrument's 802.11g proposal for 22mbps technology operating on 2.4GHz. The TI proposal, should it be adopted, could extend the life of 802.11 on the 2.4GHz band and push out the adoption of 802.11a.

Atheros' slogan is "the air is cleaner at 5GHz," because few devices use the band. However, analysts say this clean-air theory could create a problem for Atheros if companies don't begin purchasing 802.11a products as quickly as expected.

For now, the company is clearly ahead of competitors, including Intersil and Intel, said Smolek.

"I think Atheros has a very strong team, and it's very cutting edge, with Dr. (Teresa) Meng," Smolek said. Meng, a Stanford University professor, is the founder and chief technology officer of the 110-employee, privately held company.

Gartner analysts Ken Dulaney and Bob Egan say many enterprises planning to put up a new building wonder whether they should make the LAN completely wireless. The answer, they say, is an unequivocal "no." see commentary

The company will deliver the AR5000 this summer, which, along with a base-station product, will allow the wireless network to connect to a wired network.

Atheros is targeting companies that would make PC Cards for notebooks and PCI add-in cards for desktop PCs. It is also targeting PC manufacturers that would build the wireless chips directly into notebooks in MiniPCI slots or possibly by placing the chips on the motherboard.

The chipmaker also sees a market in consumer electronics. Here, the technology might be used for wireless distribution of multimedia content, such as video or as a replacement for the cables that link devices.

PC products should begin to appear in the fall, Bercow said.

Atheros says its 5GHz chip package is ideal for use in PCs. That is because its radio will not interfere with Bluetooth or other similar wireless technologies operating on the 2.4GHz band, allowing a PC maker to offer Bluetooth and wireless LAN at the same time.

Critical mass remains a ways off, the company concedes. "I would expect 802.11a to come at 2004 or 2005, now," he said. "Inevitably, I think, it will happen. The issue is with the state of the economy right now."

But if the corporate market does not respond right away, Atheros might be able to make hay in consumer electronics.

"There's opportunity at higher and lower speeds," said Rich Redelfs, CEO of Atheros.