Can Bluetooth compete with WLAN?

Summary:COMMENTARY--Much debate is brewing over whether Bluetooth will replace WLAN standards like 802.11b.

COMMENTARY--Much debate is brewing over whether Bluetooth will replace WLAN standards like 802.11b. Yet, how can a technology, initially developed for cable replacement, be seen as a threat to a Wireless LAN technology? Our perspective is that, in most cases, it will not be a threat.

In fact, Bluetooth is delayed by at least a year, primarily due to a delay by manufacturers in getting products to market. In the meantime, 802.11b is gaining strong momentum as the WLAN standard. Realistically, the Bluetooth industry should focus on developing applications to take advantage of this superior cable replacement technology that will eventually be embedded in hundreds of millions of handheld devices.

Common wisdom in favor of Bluetooth
Bluetooth is a low cost, low power, robust wireless connection method with a small footprint that makes it very well suited for millions of handheld devices. Some common early assumptions favoring Bluetooth include:

* The price of a Bluetooth chipset, excluding application interface software, is expected to drop from $20 to $5 by 2003.

* A Bluetooth chip, designed to communicate in the 10m range, consumes only 1mW of power, compared to an 802.11b chip, which consumes more than 1W. A single Bluetooth chipset is also fairly small, with a size of 8x8mm, compared to the smallest 802.11b at 30x14mm.

* Bluetooth and WLAN use the same frequency, 2.4GHz. However, given Bluetooth is designed to be a very robust technology that changes frequency at the speed of 1600 hops/second, it has an advantage over WLAN technologies like 802.11b.

* Bluetooth is expected to have a very large reach this year with installation in more than 120 million end user devices, compared to only 4.3 million WLAN products.

A somewhat different reality
However, not all is what it seems. The predicted price drop for a Bluetooth chipset is driven by aggressive forecasts in volumes shipped. Recently revised volume forecasts of end-user devices shipped with Bluetooth functionality are in fact only 20-30 million units this year. At the same time, the cost of a WLAN chip is now, according to some manufacturers, also expected to fall to around $5 by 2003; competitive with Bluetooth chipsets. In addition, Bluetooth faces interoperability issues, not only on the physical layer between different hardware manufacturers, but also on the application layer, where so far, few profiles have been developed or agreed upon.

Several players in the WLAN industry predict a move to 5GHz by 2004, positioning to avoid potential Bluetooth interference and reaching transmission speeds of 24Mbps. Bluetooth only gives a maximum speed of 721kbps for data, compared to 11Mbps for 802.11b. Therefore, streaming video applications, or downloading large quantities of information from the Internet to a laptop or PDA, is more likely to happen over a WLAN connection.

Moreover, Bluetooth was never intended to become a network technology, and it holds limited ability to do handoffs between access nodes-an essential feature to ensure mobility. Several manufacturers have solved this for data communication, but real time mobile voice communication is still being developed.

Finally, with Bluetooth on every laptop, communication flow could potentially go directly through the computer without going through the access node and the corporate firewall, necessitating an increased need for "personal firewalls" residing on computers, as they become access nodes into the corporate Intranet. With Bluetooth's security standard, only the device is authenticated and not the user. Therefore, additional application level security needs to be implemented to authenticate the user and ensure secure information flow.

The true Bluetooth advantage
There are some areas where Bluetooth holds an advantage, voice communication being one. Here, Bluetooth can be used in a cordless phone within a 10m range, in an office environment or home, without the need for handoffs. Other WLAN technologies need voice-over-IP to support voice communication, which is not likely to happen soon.

However, rather than trying to replace an already established wireless LAN technology, the Bluetooth industry should focus on tapping into the technology's clear advantages as a cable replacement technology, and quickly solve some fundamental challenges, like interoperability, security, and the need for compelling applications.

Successful companies will develop applications that take advantage of a cable replacement technology being embedded in numerous handheld devices. A good early example of this is Ericsson's Blip product. Blip is a small, Bluetooth transceiver that promises, among other things, to send messages to shoppers in a store or enhance the information flow from advertising bulletin boards to potential customers. The product is due for release this summer for approximately $500.

Soon, Bluetooth functionality will be embedded not only in our handheld communication devices, but also in other consumer electronic devices, like MP3 players, digital cameras, and gaming devices. At first, such devices will be enabled through add-on Bluetooth packages connecting through a connector or expansion bay, like the USB-port or PCMCIA-slot. However, the technology will eventually be embedded in the device itself. Imagine a scenario where gamers come together, connect their Gameboys over Bluetooth, instead of cables, and form multiplayer games. These more confined solutions are advantageously positioned to take off first than solutions in an open environment with resulting interoperability challenges.

Whatever one might believe about Bluetooth as the next wireless access technology, successful players are wise to focus now on developing compelling end-user applications that primarily take advantage of this cable replacement feature embedded in millions of handheld devices.

Mattias Ringqvist (mattias_ringqvist@mckinsey.com) is a consultant in the Stockholm Office, with experience from several European and US telecommunication engagements. Will Daugherty (will_daugherty@mckinsey.com) is a partner in McKinsey & Company's Silicon Valley Office where he focuses on serving communications technology companies. Both are leaders in McKinsey's telecommunications practice and mobile commerce initiative. COMMENTARY--Much debate is brewing over whether Bluetooth will replace WLAN standards like 802.11b. Yet, how can a technology, initially developed for cable replacement, be seen as a threat to a Wireless LAN technology? Our perspective is that, in most cases, it will not be a threat.

In fact, Bluetooth is delayed by at least a year, primarily due to a delay by manufacturers in getting products to market. In the meantime, 802.11b is gaining strong momentum as the WLAN standard. Realistically, the Bluetooth industry should focus on developing applications to take advantage of this superior cable replacement technology that will eventually be embedded in hundreds of millions of handheld devices.

Common wisdom in favor of Bluetooth
Bluetooth is a low cost, low power, robust wireless connection method with a small footprint that makes it very well suited for millions of handheld devices. Some common early assumptions favoring Bluetooth include:

* The price of a Bluetooth chipset, excluding application interface software, is expected to drop from $20 to $5 by 2003.

* A Bluetooth chip, designed to communicate in the 10m range, consumes only 1mW of power, compared to an 802.11b chip, which consumes more than 1W. A single Bluetooth chipset is also fairly small, with a size of 8x8mm, compared to the smallest 802.11b at 30x14mm.

* Bluetooth and WLAN use the same frequency, 2.4GHz. However, given Bluetooth is designed to be a very robust technology that changes frequency at the speed of 1600 hops/second, it has an advantage over WLAN technologies like 802.11b.

* Bluetooth is expected to have a very large reach this year with installation in more than 120 million end user devices, compared to only 4.3 million WLAN products.

A somewhat different reality
However, not all is what it seems. The predicted price drop for a Bluetooth chipset is driven by aggressive forecasts in volumes shipped. Recently revised volume forecasts of end-user devices shipped with Bluetooth functionality are in fact only 20-30 million units this year. At the same time, the cost of a WLAN chip is now, according to some manufacturers, also expected to fall to around $5 by 2003; competitive with Bluetooth chipsets. In addition, Bluetooth faces interoperability issues, not only on the physical layer between different hardware manufacturers, but also on the application layer, where so far, few profiles have been developed or agreed upon.

Several players in the WLAN industry predict a move to 5GHz by 2004, positioning to avoid potential Bluetooth interference and reaching transmission speeds of 24Mbps. Bluetooth only gives a maximum speed of 721kbps for data, compared to 11Mbps for 802.11b. Therefore, streaming video applications, or downloading large quantities of information from the Internet to a laptop or PDA, is more likely to happen over a WLAN connection.

Moreover, Bluetooth was never intended to become a network technology, and it holds limited ability to do handoffs between access nodes-an essential feature to ensure mobility. Several manufacturers have solved this for data communication, but real time mobile voice communication is still being developed.

Finally, with Bluetooth on every laptop, communication flow could potentially go directly through the computer without going through the access node and the corporate firewall, necessitating an increased need for "personal firewalls" residing on computers, as they become access nodes into the corporate Intranet. With Bluetooth's security standard, only the device is authenticated and not the user. Therefore, additional application level security needs to be implemented to authenticate the user and ensure secure information flow.

The true Bluetooth advantage
There are some areas where Bluetooth holds an advantage, voice communication being one. Here, Bluetooth can be used in a cordless phone within a 10m range, in an office environment or home, without the need for handoffs. Other WLAN technologies need voice-over-IP to support voice communication, which is not likely to happen soon.

However, rather than trying to replace an already established wireless LAN technology, the Bluetooth industry should focus on tapping into the technology's clear advantages as a cable replacement technology, and quickly solve some fundamental challenges, like interoperability, security, and the need for compelling applications.

Successful companies will develop applications that take advantage of a cable replacement technology being embedded in numerous handheld devices. A good early example of this is Ericsson's Blip product. Blip is a small, Bluetooth transceiver that promises, among other things, to send messages to shoppers in a store or enhance the information flow from advertising bulletin boards to potential customers. The product is due for release this summer for approximately $500.

Soon, Bluetooth functionality will be embedded not only in our handheld communication devices, but also in other consumer electronic devices, like MP3 players, digital cameras, and gaming devices. At first, such devices will be enabled through add-on Bluetooth packages connecting through a connector or expansion bay, like the USB-port or PCMCIA-slot. However, the technology will eventually be embedded in the device itself. Imagine a scenario where gamers come together, connect their Gameboys over Bluetooth, instead of cables, and form multiplayer games. These more confined solutions are advantageously positioned to take off first than solutions in an open environment with resulting interoperability challenges.

Whatever one might believe about Bluetooth as the next wireless access technology, successful players are wise to focus now on developing compelling end-user applications that primarily take advantage of this cable replacement feature embedded in millions of handheld devices.

Mattias Ringqvist (mattias_ringqvist@mckinsey.com) is a consultant in the Stockholm Office, with experience from several European and US telecommunication engagements. Will Daugherty (will_daugherty@mckinsey.com) is a partner in McKinsey & Company's Silicon Valley Office where he focuses on serving communications technology companies. Both are leaders in McKinsey's telecommunications practice and mobile commerce initiative. COMMENTARY--Much debate is brewing over whether Bluetooth will replace WLAN standards like 802.11b. Yet, how can a technology, initially developed for cable replacement, be seen as a threat to a Wireless LAN technology? Our perspective is that, in most cases, it will not be a threat.

In fact, Bluetooth is delayed by at least a year, primarily due to a delay by manufacturers in getting products to market. In the meantime, 802.11b is gaining strong momentum as the WLAN standard. Realistically, the Bluetooth industry should focus on developing applications to take advantage of this superior cable replacement technology that will eventually be embedded in hundreds of millions of handheld devices.

Common wisdom in favor of Bluetooth
Bluetooth is a low cost, low power, robust wireless connection method with a small footprint that makes it very well suited for millions of handheld devices. Some common early assumptions favoring Bluetooth include:

* The price of a Bluetooth chipset, excluding application interface software, is expected to drop from $20 to $5 by 2003.

* A Bluetooth chip, designed to communicate in the 10m range, consumes only 1mW of power, compared to an 802.11b chip, which consumes more than 1W. A single Bluetooth chipset is also fairly small, with a size of 8x8mm, compared to the smallest 802.11b at 30x14mm.

* Bluetooth and WLAN use the same frequency, 2.4GHz. However, given Bluetooth is designed to be a very robust technology that changes frequency at the speed of 1600 hops/second, it has an advantage over WLAN technologies like 802.11b.

* Bluetooth is expected to have a very large reach this year with installation in more than 120 million end user devices, compared to only 4.3 million WLAN products.

A somewhat different reality
However, not all is what it seems. The predicted price drop for a Bluetooth chipset is driven by aggressive forecasts in volumes shipped. Recently revised volume forecasts of end-user devices shipped with Bluetooth functionality are in fact only 20-30 million units this year. At the same time, the cost of a WLAN chip is now, according to some manufacturers, also expected to fall to around $5 by 2003; competitive with Bluetooth chipsets. In addition, Bluetooth faces interoperability issues, not only on the physical layer between different hardware manufacturers, but also on the application layer, where so far, few profiles have been developed or agreed upon.

Several players in the WLAN industry predict a move to 5GHz by 2004, positioning to avoid potential Bluetooth interference and reaching transmission speeds of 24Mbps. Bluetooth only gives a maximum speed of 721kbps for data, compared to 11Mbps for 802.11b. Therefore, streaming video applications, or downloading large quantities of information from the Internet to a laptop or PDA, is more likely to happen over a WLAN connection.

Moreover, Bluetooth was never intended to become a network technology, and it holds limited ability to do handoffs between access nodes-an essential feature to ensure mobility. Several manufacturers have solved this for data communication, but real time mobile voice communication is still being developed.

Finally, with Bluetooth on every laptop, communication flow could potentially go directly through the computer without going through the access node and the corporate firewall, necessitating an increased need for "personal firewalls" residing on computers, as they become access nodes into the corporate Intranet. With Bluetooth's security standard, only the device is authenticated and not the user. Therefore, additional application level security needs to be implemented to authenticate the user and ensure secure information flow.

The true Bluetooth advantage
There are some areas where Bluetooth holds an advantage, voice communication being one. Here, Bluetooth can be used in a cordless phone within a 10m range, in an office environment or home, without the need for handoffs. Other WLAN technologies need voice-over-IP to support voice communication, which is not likely to happen soon.

However, rather than trying to replace an already established wireless LAN technology, the Bluetooth industry should focus on tapping into the technology's clear advantages as a cable replacement technology, and quickly solve some fundamental challenges, like interoperability, security, and the need for compelling applications.

Successful companies will develop applications that take advantage of a cable replacement technology being embedded in numerous handheld devices. A good early example of this is Ericsson's Blip product. Blip is a small, Bluetooth transceiver that promises, among other things, to send messages to shoppers in a store or enhance the information flow from advertising bulletin boards to potential customers. The product is due for release this summer for approximately $500.

Soon, Bluetooth functionality will be embedded not only in our handheld communication devices, but also in other consumer electronic devices, like MP3 players, digital cameras, and gaming devices. At first, such devices will be enabled through add-on Bluetooth packages connecting through a connector or expansion bay, like the USB-port or PCMCIA-slot. However, the technology will eventually be embedded in the device itself. Imagine a scenario where gamers come together, connect their Gameboys over Bluetooth, instead of cables, and form multiplayer games. These more confined solutions are advantageously positioned to take off first than solutions in an open environment with resulting interoperability challenges.

Whatever one might believe about Bluetooth as the next wireless access technology, successful players are wise to focus now on developing compelling end-user applications that primarily take advantage of this cable replacement feature embedded in millions of handheld devices.

Mattias Ringqvist (mattias_ringqvist@mckinsey.com) is a consultant in the Stockholm Office, with experience from several European and US telecommunication engagements. Will Daugherty (will_daugherty@mckinsey.com) is a partner in McKinsey & Company's Silicon Valley Office where he focuses on serving communications technology companies. Both are leaders in McKinsey's telecommunications practice and mobile commerce initiative.

Topics: Wi-Fi, Networking

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