3Com's new wireless division will unveil plans next week to build technology that links PCs, PalmPilots, cell phones, and other devices to each other--and to the Net--without wires.
With radio transmitters and receivers installed in devices, 3Com envisions a future where employees can take their notebook PCs to a meeting and have wireless Net access and email. Palm users could even look up a phone number in an address book and automatically instruct their cell phones to dial the number.
The networking firm--which will formally announce its plans at the Network+Interop industry trade show--is counting on the emerging wireless market to help the company recover from its recent financial woes.
Analysts say 3Com has the potential to become a major player in the wireless market that now includes competition from Lucent Technologies, Nortel Networks, Proxim, and others. A Cahners In-Stat Group report predicts the worldwide wireless market will grow from $582 million this year to $1.2 billion by 2001.
"Wireless is poised for explosion, but it's not exploding yet," said analyst Alan Zeichick of Camden Associates. "3Com's planted their stake in the ground. They need to establish credibility, and setting up a separate wireless division was a smart way to do that."
3Com created the wireless division last month as part of plan to move the company into more profitable areas. The division fits under the new Personal Connectivity Business Unit, which includes other emerging, potentially lucrative markets, such as home networking and high-speed Net access.
Analysts say 3Com is entering the market at the right time as standards are being finalized and technology is improving. Because of its expertise in mass production, 3Com can help drive prices down and make it more palatable to businesses and consumers.
"They have the potential to become a leader because they sell to broad horizontal markets with massive volume, distribution and marketing channels," Zeichick said. "They're good at driving prices down. Other people in this market can't do that. They don't have 3Com's retail and marketing presence."
High prices have relegated wireless technology to vertical markets, such as doctors or workers on the factory floor who need to access information quickly over a laptop, Zeichick said.
For example, a regular network interface card for a PC costs between $25 to $50, while a wireless version usually costs $300 to $400. A normal eight-port hub costs about $25, while a wireless version costs between $1,500 to $2,000, he said.
Cahners In-Stat analyst Fran Firth also believes 3Com could do well in the market because demand for wireless connections exists in the business sector, just as long as prices are low.
"Companies are looking to bring a wireless LAN into their enterprise. It's the whole mobility trend," she said. "A business professional requires portability. They want to take their technology with them and be productive wherever they are."
Analysts say Net access on the PalmPilot will help bolster demand for the handheld device. It could replace the need for two-way pagers, as users could message each other with online chat software, they said.
"People rely heavily on access to email and the Internet. This increases their productivity," Firth said. "You no longer can use the excuse that 'I wasn't at my desk.'"
Breaking it down
3Com executives have broken out their wireless strategies into different segments. The company has partnered with wireless firm Symbol Technologies to build a wireless local area network in businesses at speeds of 11 megabits per second (mbps), which analysts say is important because it's as fast as Ethernet. Current wireless technology runs at about 2 mbps.
The 11 mbps technology--based on an emerging standard--will include notebook PC cards and network interface cards that have radio transmitters and receivers built-in. The technology will also require hubs, which could be affixed to ceilings or walls to connect the wireless technology with the regular wired networks, and network management software.
While 3Com is touting the technology as 11 mbps, in reality, it's 10 mbps of data exchange and 1 mbps of error correction, said Camden Associates' Zeichick.
"The 10 mbps is a good psychological barrier," he said. "It's the same speed as Ethernet and people are used to it. It's perfectly fine for sharing Internet access, sending files and printing. But there's a few things you can't do, like running an application remotely from a network drive."
In the future, 3Com plans to build a cordless phone that will allow employees to make telephone calls over the Internet, said Jeff Ambramowitz, product line manager for 3Com's wireless division.
3Com this winter will sell a cheaper, stripped-down version of the wireless LAN technology to home users. The home networking kit will allow consumers to connect their PCs and printers and share a single Internet connection.
As reported earlier, 3Com will release its Palm VII organizer with Net access this summer. The Internet access, with pricing beginning at $9.95 a month, will give users news and information, such as stock quotes from E*Trade and sports scores from ESPN.
3Com is also working on "personal area network" technology that will allow devices to communicate with other devices at close ranges, such as PCs, cell phones, and other handhelds. 3Com's Ambramowitz said a future device includes a wireless headphone that will allow drivers to talk on a cell phone without having to hold a handset.
The company will build the products using an emerging wireless standard called Bluetooth, which is expected to replace infrared, Ambramowitz said. The company has not announced specific products, but expects to ship them in the spring of 2000.
3Com is also tackling the telecommunications carrier market. This spring, the company is releasing new software for its access concentrators, which will give cell phones faster connections to the Internet.