COMMENTARY | COLUMNISTS | PHIL BAKER

Why Fi?

During a recent flight I came across a full-page ad by Qualcomm in the United Airline's in-flight magazine, Hemispheres. It shows a businessman using his notebook computer in a coffee shop. The headline reads "There are places where you can have Wi-Fi access while drinking a latte. This isn't one of them."

It then lists the advantages of Qualcomm's CDMA2000 1X wireless technology. I contacted Qualcomm (Nasdaq: QCOM) to ask them about this ad and a spokesperson said, "The premise (of the ad) is that the limitations of Wi-Fi's coverage area don't apply if you use CDMA2000 1X."

There is an online debate centered around

Jeff Belk, Qualcomm's executive vice president of marketing, wrote an article ("Adventures in the Public Hotspot Wi-Fi World") on his traveling experiences using CDMA and Wi-Fi. The article has fueled a lot of discussion among the online wireless community.

Belk makes his case for Qualcomm's CDMA2000 1X PC data services and discusses his difficult experiences connecting and the high costs encountered with Wi-Fi. His conclusion is that while both services will coexist, Wi-Fi's success is exaggerated; it's expensive and difficult to use.

I have found from my own experience and from observing consumers' attitudes and behavior over the years that it's not always about specifications and lists of advantages and disadvantages. There is an explosive and even emotional impact that Wi-Fi is having on the public, on the computer industry, on sandwich and coffee shops, and even on how and where we work.

The business case put forth by Belk is a strong one. CDMA service is accessed using a PC card from Sprint or Verizon (NYSE: VZ) that connects to their data network from virtually any location where there is cellular service. The downside is the $200-$300 for the card and $80/month for unlimited data with a 1- or 2-year commitment.

Wi-Fi's access, on the other hand, is limited to small hot spots, a few hundred square feet in area, where you need to remain during your connection. Leave the hotspot area, even wandering into an adjacent hot spot, and you lose your connection. Wi-Fi can be difficult for the customer to set up and requires separate subscriptions and billing from each of the numerous providers.

While Wi-Fi has higher access speeds, as much as 40X faster, CDMA is generally fast enough for accessing e-mail. And with the new CDMA BroadbandAccess (EVDO) PC Card just being introduced by Verizon in San Diego and Washington, D.C., the speed will be several times faster for the same cost.

Wi-Fi, on the other hand, is a "disruptive technology" that has come out of nowhere, which is part of its attraction. It's captured the imagination of the computer industry, retail businesses and the public. It's a low cost/high-speed way to easily access the Internet. In fact, it is changing computing habits and even where we do business.

While not everywhere, it can be accessed from many locations and it is often free. It's even being used as a loss leader and as a way to increase business and create customer loyalty. Starbucks' (Nasdaq: SBUX) deployment of Wi-Fi in partnership with T-Mobile (which is not yet free) has served as a model of how low-tech businesses can attract high-tech customers. Borders Books (NYSE: BGP), Schlotzsky's Deli, and McDonalds (NYSE: MCD) are following Starbuck's lead.

Schlotzsky's Deli, a national restaurant chain, offers free Wi-Fi in some of its Texas stores. The restaurant claims that 6 percent of its customers come because of the free access, and these customers will account for as much as $100,000 per store in added revenue.

Wi-Fi is even being credited with the recent surge of notebook computers. Intel (Nasdaq: INTC) has incorporated Wi-Fi into their Centrino notebook chips and is spending $400 million this year promoting it. Next year nearly every new notebook sold will have Wi-Fi built in.

While traveling in the Far East this past week, the only way I was able to connect, other than dial-up from the hotel, was by using Wi-Fi with my notebook and Palm Tungsten C PDA, and I was able to do it from numerous locations such as coffee shops, busy intersections, convention centers and some of the electronic districts, all for free.

But regardless of which technology is better, we don't need to make a choice. The consumer doesn't care what technology he uses. He wants simplicity, high speed, low cost (including low cost of entry) and convenience. So while Qualcomm is passionate about the advantages of their technology, they should not ignore the fact that there are millions of casual users who may find Wi-Fi to be good enough and who are being conditioned to high-speed access at almost no cost.

Qualcomm needs to find a way for the casual user to get a taste of CDMA2000 1x and the new BroadbandAccess without the customer making a big financial commitment. It's this ability to taste high-speed access, along with the coffee, that is driving the success of Wi-Fi.


Baker has developed and marketed consumer and computer products for Polaroid, Apple, Seiko and others. He is the holder of 30 patents and was named San Diego's Ernst & Young Consumer Products Entrepreneur of the Year in 2000. He can be reached at phil.baker@sddt.com.

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