Wi-Fi Industry Basics

In the past two years, Wi-Fi (also known as “802.11b”, “802.11g” and “802.11a”) has emerged as the dominant standard for wireless LANs (WLANS) worldwide. Anyone can set up a Wi-Fi network and cover an area of typically 100-500 feet with Internet access hundreds of times faster than a modem connection. Unlike other wireless technologies such as CDMA and GSM, Wi-Fi enjoys 100% global acceptance. It has become the “TCP/IP of wireless”, a single networking standard for all developers, equipment manufacturers, service providers and users. As with TCP/IP, any innovation in Wi-Fi benefits everyone else in the Wi-Fi community.

Hundreds of equipment manufacturers (OEMs) are now flooding the market with millions of Wi-Fi cards and access points (“APs” -- wireless hubs). The single Wi-Fi standard ensures these devices all interoperate with each other, so, for example, an access point made by Netgear will communicate with a network card from Linksys.

The price of Wi-Fi components is dropping rapidly. In 2002, a Wi-Fi radio chipset cost about $16 wholesale, a number that is expected to drop to $8 in 2003, and under $2 by 2006. Prices are falling so fast that between 2002 and 2003, total revenue from chip sales are predicted to decrease by almost 8% while unit shipments increase by over 80% during the same period.¹




As a result, prices of Wi-Fi devices designed for end users are declining rapidly. A few years ago, APs cost over $1,000, but are less than $100 today, and Wi-Fi cards that were once $700 now regularly sell for under $50 or are included free as part of a laptop, PDA or other device.

As prices have dropped, millions of private Wi-Fi networks have been deployed in offices and homes. Wi-Fi networks have also begun appearing in public spaces.

¹TechKnowledge Strategies, June, 2003.

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