Alan Cohen, VP of Marketing and Product Management at Wi-Fi switch maker Airespace, recently sent me an update on Airespace and their outlook on the Wi-Fi industry. I thought the email was worth including, so here are Alan's key in trends, in his words...

I wanted to borrow a few moments to update you on 8 points: 4 trends that reflect what we see happening in the market and 4 trends that characterize what Airespace has been up to over the past 2 seasons.  Our business has grown dramatically, and the inflection point in the enterprise wireless market is as self-evident as the cooling season before us.
• We see the shift from Verticals to the Enterprise.  Today, over 50% of our deployments are in the core enterprise segment.  Contrast this with 70% of implementations which occurred in healthcare and education only a year ago. Moreover, the average first installation deployments have moved from an average of 35-40 Access Points to over 100.  And we are seeing an increasing shift in senior management in using the wireless network.  We provided the wireless network for the Microsoft CEO Summit, where over 100 Fortune 500 CEOs used tablet computers to interact, share information and participate in one of the top management summits in the world.
 

• We see vendor consolidation. Airespace has gained the number 2 position in WLAN systems market as well as a top slot in the overall Enterprise WLAN market.  Following are the recent Dell’Oro numbers issued in the past 2 weeks.

  Total Worldwide WLAN Switch / Server / Appliance Revenues
  Total Market 2Q04

  Vendor (Rank)
  Symbol (1)
  Airespace (2)
  Bluesocket (3)
  Others, including Aruba, Avaya, Hewlett-Packard, Trapeze Networks, and additional vendors.

• We see increased focus on Voice over WLAN usage and the entrance of significant handset and systems players into the market.  Airespace, partnering with NEC in Japan, is supporting the upcoming launch of NTT DoCoMo’s dual mode FOMA project.  The ramp of VoWLAN deployments is now starting to pick up, and we are active with all three of our OEM partners, NEC, Alcatel, and Nortel to support their efforts in this space.  As you know, these 3 companies are major players (they own close to 40% of the enterprise PBX market) and their focus in enterprise wireless voice will play a tremendous role in further accelerating this trend.  Moreover, we are working with cellular handset vendors across the world as they look to bring dual mode Cellular/Wi-Fi services to the enterprise.
• We see location as a killer application for enterprise productivity and security.  Today, almost 50 enterprises are using our high-resolution location services, and our 802.11 Asset Tags will soon to hit the market.  Like mobile voice services, location tracking enhances the productivity equation of enterprise wireless networking and bolsters the business benefits for our customers.  The time savings gained simply “finding things” is incredible.  Being able to accurately understand if a security infraction occurs within the enterprise will become a cardinal rule of wireless security.  While it’s possible to claim the ability to triangulate and locate a client, without use of RF fingerprinting technology (to account for multi-path), the accuracy of location services is suspect.
• Airespace and the market has benefited tremendously from partnerships and standards.  Our OEMs partners, of course, have played a key role in our success, and so have a broad range of application and technology partners. Most recently, we have worked closely with partners to further solidify enterprise WLAN security:  working with Atheros Communication and Funk Software, we introduced Proactive Key Caching, an approach to increase the seamlessness and mobility of the newly ratified 802.11i security standard.  Working with InfoExpress and the Zone Labs Division of Checkpoint, we introduced a series of network access control services that provide unified client integrity checks -- including authentication and anti-virus verification – across the wired and wireless network.   In the next 60 days, you will hear more about many additional partnerships that are bringing additional services and value to our customers.
• Airespace continues to receive recognition for its technology, as we on Best of Show awards at N+I Las Vegas and N+I Japan. The market has created a virtuous circle for our technical innovation and customer traction and has helped propel us to a leadership post
• Airespace has expanded rapidly. With over 160 people, we have come to the point of being an increasingly global and distributed organization, with more than half of our employees working outside of San Jose, California, corporate headquarters.  We successfully brought up a development and support center in Bangalore, India, and are expanding rapidly in Asia and Europe.  One of our most exciting victories was winning the WLAN infrastructure at the world-class Hong Kong Airport.
• Airespace completed a $20M Mezzanine Round, bringing total investment in the company to roughly $60 million and we have expanded our management team to support the great opportunity in front of us.  The key business focus of the company right now is to bring the company to cash flow break-even while garnering the top market share position in our segment.

I just received a "pre-sale" email from T-Mobile for the new HP iPAQ. Here is the promotional page:

The $79.99/month rate is a not-so-subtle stab at Verizon Wireless' BroadbandAccess plan (also $79.99/month).

As Verizon Wireless expands its EV-DO network and T-Mobile expands its Wi-Fi network, it will be very interesting to see which way the much-coveted business traveler turns. It's way too early to predict a winner, but the stage is clearly set.

A few weeks after signing up for the CallVantage VoIP service from AT&T, they gave me a follow-up call (which was actually a survey disguised as a follow-up call). But hey, I've got time. And I learned a few things along the way.

The surveyer told me that the major problem AT&T was having with VoIP was installation complaints. Quite simply, their typical customer could not get the darn thing to work. In some cases, the problem had nothing to do with AT&T; it may have been the result of port blocking or poor DSL throughput. But AT&T was taking all the blame for the problems.

Here is my cable modem/Wi-Fi/VoIP setup. As a geek, I enjoyed setting it up, but I can't imagine most people would have the inclination nor patience.

(By the way, how long do you think it will be before these three boxes merge into one; and whose name do you think will be on that one box? Linksys has the edge, but anything is possible still.)

Back to AT&T: the surveyer told me that they were taking a hard look at offering a paid installation service and asked me what I would pay for it. I'm cheap, so naturally I lowballed it. But I also admitted that I would bet they could comfortably charge in the $80 to $100 range because the cost of savings of VoIP could cover the installation costs in four months or less.

So, a month or so passes and here's what I see in a recent AT&T press release:

AT&T also introduced an inside wiring service designed to connect a customer's existing home telephone configuration to AT&T CallVantage Service and activate extensions throughout the home. For a fee, AT&T will dispatch a trained technician to the customer's home. The technician will reconfigure existing lines and telephone jacks, install additional jacks if required, and provide limited assistance with service set-up. The interval for scheduling service is two to five days.

This is great news. Of course, the devil is in the details. Assuming AT&T handles installation like your typical cable company, they could do more harm than good to their business, but I'll assume the latter. Installation is going to be necessary for the vast majority of potential VoIP users and this could provide a nice advantage for CallVantage.

But installation is also going to slow down this revolution, at least until these many technical and operational quirks are resolved.

T-Mobile announced a major hotel Wi-Fi installtion win. It will deploy Wi-Fi in 350 Red Roof Inns throughout the US. This is obvously good news for T-Mobile and bad news for the companies you would normally associate with a hotel Wi-Fi installation, such as Wayport, Stayonline and STSN.

Red Roof Inns is owned by the French chain Accor and I suspect T-Mobile's German parent played a large role in winning the deal. T-Mobile said that it now has 7,600 hotspots globally, most of which are Starbucks locations.

I had expected that T-Mobile and Wayport would have some sort of reasonable roaming deal in place by now. Given this announcement, I'm less optimistic that such a deal will happen. If I were Wayport, I would certainly relish T-Mobile roaming dollars but I would also be concerned about T-Mobile taking market share.

If I were T-Mobile, I would want to get access to Wayport's network so I could have a lock on the largest US network and offer potential retail and hotel chains a very large universe of potential vistitors. But T-Mobile has other problems to focus on; I keep hearing rumblings that Starbucks locations and airline partners want greater control over their Wi-Fi networks so they can give access away for free.

So we shall see. I still hold out hope that a T-Mobile/Wayport deal will happen this year.

T-Mobile is pre-promoting the HP IPAQ h6315, arguably the mother of all bundled devices. It packs Bluetooth, Wi-Fi and GPRS into one handheld device. There are countless articles out already about this device (pictured below), but what I'm most intrigued about is not the bundling of features but the bundling of services.

T-Mobile will naturally offer a bundled service that combines voice, Internet (GPRS and Wi-Fi) and email. The device will cost $500 but T-Mobile hasn't announced a service price yet. Some say the price will be similar to the rate that Verizon Wireless charges for its EV-DO service: $80/month. This would certainly be the safe way for T-Mobile to proceed; after all, there are thousands of early adopters out there chomping at the bit to try this thing (I'm chomping but I'm also cheap, so I'll be a holdout).

A bolder pricing move would be $60/month or less. This would amount to a savings for subscribers who currently pay for cellular at roughly $50/month plus another $20/month for Wi-Fi. A $60/month or less fee would further drive down the perceived cost of Wi-Fi. At $60/month, Wi-Fi would appear to cost around $10/month, making it the best deal going, not only in the US, but globally.

Bundling is now the rage among carriers of all stripes -- from cable to cellular. As more devices ship bundled with Wi-Fi, Wi-Fi will become increasingly bundled with services, and at lower and lower monthly rates.

There is a new player on the wireless remote access field. The company has actually been around for a number of years, but only in the fixed line market. The company calls itself Aramova (formerly known as Rockstar Software; I liked the old name better).

I spoke with them recently to find out why they feel there is room for yet another player. After all, they're joining a field that already includes:

• iPass
• GoRemote (formerly GRIC)
• Boingo
• Wayport
• PCTEL

To some extent, Aramova had little choice but get into the wireless market. Fixed line carriers want to start offering their subscribers wireless packages and if Aramove doesn't offer them a solutiion, a competitor certainly will. This highlights yet again the blurring between fixed and mobile networks and the increasing level of competition between companies that up until recently rarely ran into one another.

On Monday, Aramova will announce a deal with Dutch mobile carrier KPN. The carrier is going to use Aramova's technology to provide remote connectivity across GPRS, UMTS and Wi-Fi networks.

According to the forthcoming press release "KPN customers will be able to simply connect to the Internet through their laptops using a dedicated PCMCIA card or GPRS/UMTS handset without encountering the complexities associated with the installation or configuration of their hardware, choosing the right network, switching between these networks, or enjoying value-added services.  KPN will soon be introducing numerous non-voice products and business services for their customers, which will be enabled through Aramova’s advanced mobility solutions."

What I find particularly interesting about the KPN deal is that KPN had also been working with iPass. I asked Aramova how they managed to win out over iPass and they cited a number of factors, such as flexible software and "network agnostic" subscriber software clients. I sitll need to follow up with KPN to learn more, but I think the most relevant advantage is that Aramova provides only the software, not the network, while iPass provides both. So KPN can buy Aramova's client software and then strike deals with any number of network providers, including iPass even. Looking ahead, I wonder if iPass will struggle to sell in to carriers because they compete to some extent with the carriers. After all, iPass has great success selling its network to enterprises, the same folks that carriers also want to do deals with. Aramova, by staying out of service provider business, is free of that overhead.

I have not tested Aramova's software client yet. I have been testing the iPass client and have found it very usable and the network is by far the largest I've seen so far.

More of these "client wars" in the weeks ahead...

Panera Bread announced today that it is expanding its free Wi-Fi initiative from the 325 locations currently now available to 500 locations over the next 12 months. It expects to hit 375 locations by year end.

Here are some usage tidbits they released:

• Of the hundreds of thousands of customer accesses over the last year, the average connect time is one hour.
  
• The average total online time per bakery/cafe has increased three-fold over the last twelve months. 
  
• Free Wi-Fi is not only keeping customers in stores longer, but doing so during off-peak hours.
  
• The network is managed by ICOA (OTCBB: ICOA), a public hotspot service provider based out of Rhode Island.

Good News for Panera; Bad News for Starbucks
I relied heavily on Panera's network while I was in St. Louis last month (where the chain is known as the St. Louis Bread Company). Knowing that they offered free Wi-Fi kept me out of Starbucks. Granted, had I already subscribed to T-Mobile's Wi-Fi service I would have eagerly rushed to Starbucks. But the service is too expensive, even for me, a Wi-Fi addict. Naturally, while I was in Panera I couldn't help but wondering what was going on inside the minds of executives over at Starbucks. I've heard rumors that managers of some Starbucks locations have urged higher ups to let them offer their Wi-Fi networks for free, to better compete with the independent coffee shops that already offer free Wi-Fi. But Starbucks is stuck. The network is controlled by T-Mobile and the carrier is clinging to the notion that Wi-Fi should be a direct revenue generator. Yet Wi-Fi will ultimately be an indirect revenue generator, a la Panera.

In a Parity World, Wi-Fi Makes a Difference
Now I realize that Starbucks and Panera are not direct competitors. Starbucks is strictly a coffee shop while Panera is a full-fledged bakery/deli/coffee shop. Also, Panera locations typically have a great deal more square footage, so they have less of a problem with customers camping out for hours on end. And Panera has more to gain revenue-wise from offering free Wi-Fi because if it can convince someone (like me) to drive past Starbucks for Panera, it may sell me a great deal more than a cup of coffee. Still, the two chains do share many of the same clientele, and I suspect it is these people who will force Starbucks to rethink Wi-Fi.

In my mind, the only question is when, not if Starbucks will offer Wi-Fi for free. T-Mobile needs to borrow a page from Wayport and figure out how to build a business model that allows venues the ability to offer free Wi-Fi without significant trouble or expense.

So congrats to Panera. The chain caught a lot of flack a year ago for the free Wi-Fi "gimmick." But now this gimmick is setting the chain apart from Starbucks, which is in danger of being better known for "overpriced Wi-Fi."