We estimate that a fifth of the laptops now selling in the country are Centrino powered; globally the number is higher at about 40%. The Indian market for WLAN products grew from a minuscule Rs 12 crore in 2002-03 to Rs 51.5 crore in 2003-04, clocking a 329% growth on an insignificant base, as reported by Voice&Data.

Last year also saw large-scale deployment of some form of wireless by enterprises across sectors. Wireless penetration touched 26% this year, up from a meagre 12% last year among large enterprises in the country as reported by the DQ-IDC India Survey: Megaspenders 2004 (See Dataquest, April 30, 2004). The Indian CIO community was equally gung-ho about Wi-Fi prospects for the year ahead. Megaspenders 2004 also said, "More than one third of the CIOs surveyed are looking at deploying some form of Wi-Fi in the year ahead." That's a marked increase from the responses last year. In a similar survey last year, only 22% of the CIOs said that they would look at some form of Wi-Fi." (See Dataquest, May 15, 2004) This activity is to a large extent also explained by the fact that the rapidly falling prices of WLAN equipment have put the technology within the reach of smaller companies too. And as a consequence, a number of SMEs have deployed WLANs as their primary networks instead of just as extensions and complements to their existing wired networks. (Sidebar: Falling Equipment Prices)

Public Hotspots
Worldwide, hotel lobbies and business centers, airport lounges, convention centers, universities, coffee bars, and even homes boast of being "lit up" by wireless. The activity at home may not be exactly hectic but is definitely accelerating. In the US just about 1,000 hotels offered Wi-Fi in 2002; the number is expected to swell to 25,000 by 2007. Jiwire.com, a hotspot locator on the web, says that over 5,300 hotels in the US already offer Wi-Fi, while globally the number stands at over 11,490 hotels. The website reports that there are 42,000 public hotspots across the world presently. This number is expected to go up to 477,000 by 2007, according to projections by US-based research firm, Radicati Group.

A large network of hotspots is the one operated by T-Mobile that covers all Starbucks coffee bars in the US. McDonald's, is joining the bandwagon too. 6,000 of its outlets in the US will be lit up by the end of next summer. Closer home, Barista Coffee has also Wi-Fied a number of bars working with Tata Teleservices, which will deploy hotspots in all the 130 Barista cafés. It is looking at setting up another 300 hotspots by the year-end.

But the market segment that seems to be at the forefront of adoption is the hospitality segment, consisting mainly of four and five star hotels. According to Mangesh Kolhatkar, director, Pronto Networks, a 'carrier-grade specialized wireless solution provider', the addressable market in these four and five star hotels is about 800 properties. About 200 of these are already lit up. Says Kolhatkar, "Less than half are really functional, the rest have Wi-Fi so that they can check one more box in their marketing collateral." But, he adds, "Now more of these hotels are coming forward to deploy networks that can offer real service."

Intel continued to extend its support to Wi-Fi and recently announced that it would help establish 1,000 hotspots in the country this year. Bharti is working with Intel to promote the adoption of newer technologies and develop applications for wireless. And then of course, the government has sat up and taken notice too. While the 802.11b has been de-licensed for indoor use, the government is looking at extending this to 802.11g indoor.

According to a study by AT Kearney, global Wi-Fi equipment revenues are expected to grow at a CAGR of 20% between 2003 and 2007. A survey conducted by Morgan Stanley in February 2004 among 225 Fortune 1000 CIOs places WLANs second only to security as far as spending priorities in network equipment are concerned. WLANs ranked a notch lower among the CIOs in a similar survey conducted in November 2003. US-based Radicati Group expects the Wi-Fi usage to grow worldwide from 42 million users in 2003 to 609 million users in 2007.

Since a major target market for Wi-Fi was the home market, security was a much lower priority for the developers. Corporate users on the other hand demand a higher level of security. The Wi-Fi Alliance, a non-profit international association to promote interoperability among 802.11 equipment manufacturers, in a paper said that the threat from improperly secured WLANs is real for today's enterprises. However, the paper continues, the good news for enterprise managers is that there is a range of strong, vendor-neutral solutions available that addresses the vulnerabilities inherent in the original 802.11 security implementation.

Wanted: A Business Case
In spite of all this action, the one aspect that is less visible is sound business case. Public hotspots may be the rage, but the cash register for the Indian service provider has not yet started to ring. Anecdotal research suggests that the Starbucks coffee shops have seen an increase in business as customers are attracted to it throughout the day and tend to stay longer, for about 45 minutes, as opposed to the average stop of 20 minutes. But the real translation into revenues for the service provider may be some way away. "Wi-Fi hot spots will remain more froth than substance," says a recently published report by Deloitte Research. Titled Mobile and Wireless Predictions 2004, it adds that operators, and any other party considering deployment of Wi-Fi hot spots, should study the business case for them vigorously.

"With all the hype today about the rollout of hotspots, it's as if the dot-com boom and bust never happened," Lars Godell, senior analyst, Forrester, comments. In fact, the basic constraints, namely, the number of devices in use and users' unwillingness to pay a significant amount for Internet access on the go will limit public WLAN users to numbers well short of the planned networks' carrying capacity. Also, the sky-high costs of providing Internet backhaul from hotspots will kill many hotspot business cases, he adds. 

An example that stands out was the suspension of operations by the AT&T, IBM and Intel funded Cometa Networks, which erected and managed a network of public hotspots across the US. The reason for suspension: "The financial return for investors was not perceived to be sufficient to attract the necessary capital," said a release on the company website.

There is no denying the fact the hotspots will open the floodgate of possibilities to create segments-of-one to market goods and services, but the biggest hurdle to adoption on the user front is the penetration of Wi-Fi enabled devices. And till critical mass penetration of such devices is achieved, a question mark will continue to hang on the viability of hotspots.

Mohit Chhabra in New Delhi