Wireless guru Nick Hunn has predicted the death of several silicon suppliers who make wireless LAN (WiFi) components, following the decision of both Intel and AMD to provide the bulk of the circuitry needed, on the motherboard.
Suppliers of WiFi components, especially client PC Cards, could find that their market vanishes over the next twelve months, argues Hunn, who is managing director of TDK Grey Cell, a specialist Bluetooth design house.
In a White Paper, Hunn points out that Intel's Centrino chip set (formerly code-named Banias) provides almost everything a PC maker needs to provide wireless support on the motherboard. AMD has come up with something very similar.
Hunn writes: "Although the customer will benefit, the introduction of Banias poses a very serious threat to the raft of silicon companies who have invested in wireless LAN. The fact that both Intel and AMD have a low cost, native solution to Wi-Fi on the motherboard excludes these vendors from the market for new laptops."
The market for legacy laptops and add-on USB adapters for desktops, is not great. But there is worse news, because the perceived "fair price" of such devices is about to plummet, Hunn says.
The problem is simple: add-in cards will be available for trivial prices; and the general buying public won't realise that some of these rely on the presence of Banias style support on the motherboard.
"A crucial concern for this legacy market will be the perceived cost of adding wireless to a laptop." says Hunn. "It is not yet clear what percentage of laptops will have the full RF solution placed on the motherboard. For those that do not, some manufacturers may provide connectors for a wireless LAN transceiver module to be added. Intel has already identified this, and suggested that it will supply mini-PCI transceivers, with an anticipated market price of $45 for 802.11b and $65 for multimode in June 2003."
That price looks unthreatening, he admits. "But once again, the emergence of alternative RF chip suppliers suggests to us that these process will rapidly be undermined by third party offerings. If this is the case, the list price of these transceiver boards may well be advertised below $30, setting a price expectation for the consumer, who is likely to be unaware of the distinction between this and a full PCMCIA card."
The inevitable result, says Hunn, "will be fierce price competition, further commodifying wireless LAN products and ensuring that there is little opportunity for margin either for the silicon supplier or the peripheral manufacturer."
Instead they will be forced to concentrate on the legacy laptop market, (where price competition will be fierce) the desktop USB market, the PDA market (which is small and power sensitive) and the access point manufacturers. These markets will also be attacked by Intel and AMD with "soft" Wi-Fi solutions that remove the baseband processor cost and benefit from the economies of scale both will enjoy from their integrated PC market, concludes Hunn.
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