Dell preps notebooks-to-go, founds wireless division

In September, Dell will introduce a new line of Latitude notebooks featuring fully integrated wireless networking and internal antennas. Right now, Dell notebooks can be bought with add-on cards that allow consumers to turn their laptops into wireless Internet terminals. By contrast, these upcoming notebooks will come wireless-ready from the factory.

In addition, Dell announced today that is has hired Moe Grzelakowski to head a new business unit focused on wireless hardware and services. Grzelakowski (pronounced GREZ-luh-kow-ski, according to a Dell press release) comes to the company from Motorola. She will report directly to CEO Michael Dell and start in a month.

Integration will likely be an important step in driving greater commercial acceptance for wireless access, as it should simplify the wireless networking process. Rigging PCs for wireless access, which is viewed as one of the hottest trends in corporate computing, is far from painless. Current offerings require added components that are sometimes difficult to install and configure.

"Especially in the corporate side, and even in home networking, everyone agrees that if you can make it work it is the most elegant solution and the one you can ramp up the fastest in terms of infrastructure," said PC Data analyst Stephen Baker. "To any extent they can make wireless communication easier to use and more cost effective, that's a big advantage."

Apple Computer already offers internal antennas on its PowerBooks and iBooks, but Dell will also integrate the other major part, the wireless LAN (local area network) component, inside the box. Apple's LAN card comes separately.

The move increases the pressure on Apple, which has fought a bitter contest to keep Dell from encroaching on one of its core markets: education. It will also likely put pressure on companies like Hewlett-Packard and Compaq Computer, which offer add-on wireless networking for the corporate market.

But the change in the wireless strategy is significant for another reason--it signals a dramatic shift in how Dell conducts its business.

The PC manufacturer is known more as an imitator than as an innovator, according to analysts. "Typically, Dell waits for a market to mature before making any serious commitment of resources," said International Data Corp. analyst Roger Kay.

But things may be changing at Dell, which last week unveiled an MP3 home stereo component developed with digital music specialist S3. The branded music system is part of Dell's expanding focus on leading rather than following, according to analysts.

Lindy Lesperance, an analyst with Technology Business Research, said Dell can no longer wait for markets to mature, "particularly as PCs become more commodities and they have to look to other areas to generate revenue."

Wireless, apparently, is one area where Dell would rather be a leader than a follower.

"Traditionally we've been a fast follower in technology, and that has served Dell well, but the company has targeted wireless as an area where we will take a leadership position," said a source close to the PC maker.

When Dell ships its new Latitude line in September, the corporate notebook will feature an integrated antenna and support for a mini-PCI IEEE 802.11B wireless LAN card. A LAN is a short-distance network used to link a group of computers together within a building.

Early to market
Last year, Round Rock, Texas-based Dell jumped ahead of other PC makers by offering a wireless networking option developed by AiroNet.

Wireless notebook networking until now typically has relied on a PC card to send and receive data to a transceiver, or base station, attached to a corporate network. Because people can connect to network resources without using wires, they can move unfettered from, say, the cubicle to the conference room.

Dell viewed the original wireless networking offering as a good start but also as a compromise based on the limited technology available at the time, sources said. A PC card antenna placed in a notebook's PCMCIA slot offered good performance but also added a bulky component that unnecessarily tied up a slot. By integrating the antenna into the notebook case and the remaining circuitry in the mini-PCI slot, Dell doesn't have to force customers to fiddle with a bulky wireless LAN PC card that is too easily lost or damaged.

Dell, like Apple, Compaq and IBM, offers products conforming to the IEEE 802.11 wireless LAN standard, which supports transfer rates of up to 11 mpbs, or slightly faster than standard network speeds. Range varies up to 300 feet from the base station, with 150 feet being optimal for most uses.

AiroNet looked like the right company for delivering an interim solution and maybe more, Dell sources said. But Dell wasn't the only company intensely interested in the wireless manufacturer. Cisco Systems in November agreed to buy AiroNet for $799 million in a surprise bid only a few months after the wireless company went public.

Sources close to Dell said subsequent changes Cisco made to AiroNet's product strategy "were not really focused on PC OEMs (original equipment manufacturers)." Dell had already been planning something better, and it accelerated plans to make wireless an integral part of Latitude's redesign, the sources said.

As the engineers looked for a better, more versatile wireless offering, they recognized Apple had the right idea, but the Cupertino, Calif.-based company also relied on the compromise PC card approach Dell wanted to abandon.

As long as a year ago, Dell wanted to offer a mini-PCI wireless LAN option, but no major communications manufacturers had a product available. They had just started showing off the first mini-PCI modems and network cards.

Even as Dell moved its integrated antenna project forward, communications makers could not guarantee mini-PCI 802.11 components would be ready in time.

But now, with mini-PCI wireless LAN samples in hand and firm commitments from suppliers, Dell plans to begin offering the part within 45 days after the new Latitudes ship, said a source close to the company.

While Dell worked on delivering integrated wireless networking, the company continued to push ahead its existing relationship with AiroNet. In February, Dell relaunched AiroNet-made wireless products under the TrueMobile brand.

Competitors catching up
By then, Compaq had jumped fully into wireless networking, and IBM was readying a similar initiative.

The first phase of Dell's wireless LAN strategy is succeeding mainly in two markets: education and government. Sources close to Dell say about 80 percent of sales have been educational, particularly colleges and universities.

Both Apple and Dell have discovered incredible pent-up demand for wireless networking among schools, which would rather strategically place base stations than knock down dorm walls to lay networking cable.

Sources close to Dell are counting on the fully integrated wireless LAN approach to appeal to the educational market. Still, Dell faces some challenges as it readies a renewed assault on Apple's coveted education market. Apple--with about 26 percent overall share in the segment, according to IDC--has a loyal following interested in much more than just portables with wireless networking capabilities.

News.com's Michael Kanellos contributed to this report.