Microsoft Corp. will jump into the wireless networking market with a set of 802.11b base stations and PC adapters for the home or small office, it said Thursday at the DemoMobile conference in La Jolla, California.
Microsoft's Broadband Networking products will automatically configure the user's base station and PC to their local Internet service provider's settings, and can save those settings to a disk, it said in a release.
Wireless LANs (WLANs) allow users to connect to the Internet or corporate networks at broadband speeds, and interest in WLANs as a relatively easy and cheap home networking option has been growing. A recent report from Dataquest Inc. said worldwide WLAN equipment shipments will hit 15.5 million units by the end of 2002, while 26.5 million units will be shipped in 2003.
However, until more home Internet users upgrade to high-speed broadband connections, the market for WLANs will taper off, said Tim Scannell, president of market research company Shoreline Research based in Quincy, Massachusetts. WLANs don't work well with dial-up connections, because download speeds would be too slow, he said.
Security, always a concern with WLANs, is addressed in Microsoft's products by always-on 128-bit WEP (Wired Equivalent Privacy) encryption, it said. WEP encodes data sent to and from the wireless base station and PC, but is not a sufficient method of encryption by itself, and has been broken by security experts in the past, said Chris Kozup, senior research analyst for Meta Group Inc. based in Stamford, Connecticut.
"WEP is very much a baseline layer of security, (but) for the majority of home users, WEP is more than adequate," he said. Home users don't have to protect proprietary corporate data or reams of financial records, and their e-commerce transactions already have a secondary layer of security at the Web browser level with SSL (Secure Sockets Layer) encryption, he said.
Users also need to consider such steps as setting up VPN (virtual private network) accounts and password access to secure their WLANs as much as possible, Microsoft said. To prevent hackers from attempting to infiltrate the WLAN via the Internet, Microsoft includes NAT (network address translation) and a built-in hardware firewall in the WLAN kit.
More advanced users can configure their base stations through a Web browser using media access control address filtering, which allows users to configure the base station to accept and transmit data only to MAC addresses specified by the user. Every computer has a unique MAC address.
Microsoft's products are based on Intersil Corp.'s PRISM WLAN technology. Two complete kits are available for desktop or notebook users, which include the wireless base station, and USB (universal serial bus) adapters for the desktops and PCMCIA (personal computer memory card international association) cards for notebooks. Both complete kits cost US$219.95. The wireless base stations sell by themselves for $149.95, and the adapters each cost $79.95.
Several companies make WLAN products for the home and small office markets. According to research from Synergy Research Group Inc., based in Phoenix, Linksys Group Inc. led the group in terms of sales in the second quarter of 2002, with 21.9 percent of total sales of $454.3 million. Buffalo Technology (USA) Inc. was second with 17 percent of the market, while NetGear Inc. came in third with 12.1 percent market share.
All in all, there are about 90 companies making equipment for both enterprise and small office/home office WLANs, said Kozup. But Microsoft's chances in the market will probably be tied to the strength of its brand among consumers, even though its WLAN equipment price comes in higher than the competition.
"Microsoft's price is about 10 to 20 percent higher than what you would find from Linksys. But with their brand, they can afford to have a premium product," he said.
Scannell disagreed. "Most companies have products for less, and not a lot of people are shopping by brand. People are not looking at Microsoft as a home networking brand, which is what hurt Intel (Corp.) when they tried to enter this market," he said.
Apple Computer Inc. also sells wireless base stations called Airports. But while the Airport was one of the first home networking products on the market, and is "incredibly easy" for the consumer to set up and start using, the fact that it is tightly integrated with the Mac OS operating system makes it difficult for Apple to sell the product to consumers running other operating systems, Scannell said.
However, the rest of the industry should look to Apple when designing their WLAN products, he said.
"Most companies place too much onus on the user to pull information or set up things, and consumers have a low tolerance for pain when setting these things up," Scannell said.