Study predicts US$333B in Bluetooth sales by 2006

Though products featuring Bluetooth have been slow to hit the market, the wireless technology is still expected to generate worldwide revenue of just under US$2 billion in 2001, growing to $333 billion by 2006, according to a study due out in July.

The study, published by market research company Frost & Sullivan Ltd., the U.K. branch of U.S.-based Frost & Sullivan Inc., predicts that 4.2 million products using the Bluetooth technology will be shipped to market by the end of this year, with 1.01 billion Bluetooth products making it to market by 2006, said Frost & Sullivan analyst Michael Wall.

Bluetooth is a standard for short-distance wireless communications, or wireless PANs (personal area networks), that connects devices at speeds of up to 1M bps (bits per second) and maximum distances of 10 meters. Initial Bluetooth products in 2001 will be limited to PC cards, headsets and other add-on cable replacement products, Frost & Sullivan said.

The numbers in Frost & Sullivan's most recent study have been revised down somewhat slightly from the company's January study, which predicted that Bluetooth would generate $2.5 billion of revenue in 2001, with 11 million products using the Bluetooth technology sold by the end of this year. "The main reason for the change in those numbers is that the technology has taken significantly longer than anticipated," Wall said.

"The Bluetooth specification 1.1 was ratified by SIG (the Bluetooth Special Interest Group) in February and that should move things along now. We were very excited about the prospects of Bluetooth at the beginning of the year and we continue to be excited about them now," Wall said. Since the 1.1 specification was ratified, more than 100 products have been qualified, the study said.

More than 120 IT network managers in the U.S., Europe and Asia were interviewed for the study, which found that, while most respondents are clearly ready to use Bluetooth technology, there is some confusion about what Bluetooth actually is, Wall said.

"A majority of end users described Bluetooth as a wireless LAN, but that has a lot to do with who we interviewed: The people responsible for networks and for buying IT and network equipment. They have a tendency to focus on what they know best," Wall said.

At first seen by the industry as primarily a cable replacement tool, Bluetooth is being promoted by companies such as Microsoft Corp. as a viable option for wireless PAN products, but Wall said that Bluetooth is now seen as being "stretched into a wireless LAN" technology. "Bluetooth is never going to be a full wireless LAN, but it can be a complement to it, rather than a competitor," Wall said.

But as the study points out, one problem that may arise is that if Bluetooth is perceived as a wireless LAN, companies that already have wireless LAN technology in place may be much less likely to make an investment due to worries about such things as interference.

IT managers interviewed for the study also indicated that they are concerned about security issues.

While robustness, interference and perceived security flaws are all perception problems for Bluetooth, according to Wall, the biggest hurdle for Bluetooth's market acceptance is one of interoperability.

"Companies making Bluetooth products have got to make sure that they have interoperability with each other and it has to be a significant level of interoperability," Wall said, adding "there was a problem with that about six months ago, but since the 1.1 specification was released, they are being ironed out."

The study indicated, as had previously been expected, that Bluetooth will first be embraced by the European market. For example, only three of the 120 study respondents are testing Bluetooth products and those people are all in Europe.

"The U.S. market is not significantly behind Europe, but Europe is slightly ahead in cellular technology and the uptake of mobile phones, which makes a difference," Wall said.

Globally, 32.8 percent of the study's respondents said that they plan to purchase Bluetooth products in the future. By region, 44.4 percent of European respondents said they would be buying Bluetooth products while 20 percent in Asia and 18.2 percent in the U.S. indicated similar intentions.

The study also indicated that it would best benefit companies and the Bluetooth technology in general if products were sold on an application-by-application basis as opposed to the general technology push that came with the release of products using WAP (Wireless Application Protocol) technology and the media and industry hype that is now surrounding upcoming 3G (third generation) mobile technology.

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