For all the negative press that Bluetooth technology garnered in 2001 this year is turning out to be a different story. Bluetooth is far from dead and we are seeing the technology begin to make its long-awaited impact.

Clearly early expectations regarding Bluetooth adoption were over-inflated. However, there is now a cautious optimism that the worst is over and what is needed moving forward is realistic expectations and solid execution.

The Problems

In retrospect many of the obstacles that Allied Business Intelligence (ABI) had cautioned against did indeed manifest themselves. These problems included:

• Hype - Probably the single biggest problem with the Bluetooth story was hype, not unexpected in the heady days of the tech boom. Though the hype did generate interest, which in turn encouraged tangible development of Bluetooth solutions it also sowed the seeds for a backlash when the technology stumbled in the early stages.
  
• Cost - First generation Bluetooth solutions were a far cry from the promised $5 dollar target. In retrospect the oft-touted $5 figure was nothing more than a target to be reached. Many companies eager to adopt Bluetooth were disappointed when faced with the high price of first generation Bluetooth solutions.
  
• A Flawed Specification - The 1.0b specification was not fully defined and was found to have a number of bugs. Not surprisingly many of the first generation Bluetooth products were not interoperable due to incompatible chipsets. This was always a concern for a technology that would be implemented by dozens of different vendors into a variety of different products. The lack of interoperability meant that the first wave of Bluetooth solutions was essentially orphaned as companies waited for the next revision of the specification (version 1.1).
  
• Lack of Windows OS Support - The lack of a stable specification and the scarcity of interoperable products available for testing led Microsoft to not integrate the Bluetooth protocol stack into Windows XP. This was a major blow for the industry as Microsoft was one of the Promoter companies of the Bluetooth Special Interest Group (SIG).
  
• Mobile Handset Market - The slowdown in the mobile handset market and the delay in the introduction of 2.5G handsets also affected the fortunes of Bluetooth technology. The core group of Bluetooth backers includes the major handset vendors (Ericsson, Nokia and Motorola), and these companies intended to introduce Bluetooth functionality starting in their high-end 2.5G handsets. The slippage in GPRS (General Packet Radio Service) handsets in particular had an unavoidable knock-on impact on Bluetooth adoption.

Better Days Ahead

ABI believes there are now clear signs that Bluetooth technology has turned the corner, and the technology is poised to gather momentum in 2002. Important indicators of this trend going forward are:

• Stable Specification - Probably the biggest positive for Bluetooth going forward is that the problems plaguing the technology are being dealt with. The 1.1 specification has proven to be fairly stable, and is providing a good foundation for Bluetooth development. There are far fewer reports of interoperability problems, though undeniably issues remain.
  
• Focus on Core Strengths - Players have realized that given the limitations of Bluetooth that the technology's pervasiveness will be limited to applications in which very high data throughput and range are not paramount. The technology will be driven by a core set of applications, with an emphasis on cable replacement scenarios. More advanced applications will develop, but they will require time before they are ready for mass-market adoption.
  
• Silicon - While the silicon costs are still higher than many envisaged it is encouraging to see costs coming down despite a lack of significant ramp-up in volume. While the potential overlap with 802.11b remains an issue many industry observers increasingly realize that both wireless LANs and Bluetooth will coexist. Indeed Bluetooth chipsets out-shipped 802.11b chipsets by roughly a 2:1 ratio in 2001.
  
• Microsoft Support - Microsoft has also indicated that it will be including the Bluetooth protocol stack in the service pack for Windows XP, and future Windows operating systems. This has greatly mollified industry fears regarding Microsoft's commitment in supporting Bluetooth.
  
• Greater Visibility of Products - Even though Bluetooth products are still scarce in North America there is a growing list of certified products that are beginning to hit the market. The SIG announced in March this year that it had certified over 500 Bluetooth solutions. Many of these solutions are becoming widely available in Asia-Pacific (especially Japan) and Europe. Greater presence of Bluetooth-enabled solutions in North America will happen towards the middle of 2002.

Coexisting With 802.11-based Wireless LANs

Bluetooth has been thought of as a short-range wireless connectivity technology that was based on the concept of a personal area network (PAN). Few people have seriously argued that Bluetooth could support a real wireless LAN. Proper wireless LAN technologies, such as 802.11b, have higher data rates and can transmit over longer distances (typically a few hundred feet). In addition they support for complex enterprise features such as roaming/handover.

Though few people thought Bluetooth could displace 802.11b, there have been some comments to the opposite effect. Some observers have argued that with declining IC costs wireless LANs would kill Bluetooth. Though there is undoubtedly some overlap between wireless LANs and Bluetooth such comments betray a lack of a proper understanding as to the advantages of Bluetooth over 802.11b.

Bluetooth chipsets currently are available for about half the cost of 802.11b solutions. More importantly Bluetooth chipsets offer significantly lower power consumption and smaller form factors. These three key differentiators (cost, power consumption and form factor) mean that Bluetooth is far superior in certain applications in comparison to 802.11b. Conversely applications that require higher data rates and range will be dominated by 802.11b. So the real question to ask is which set of applications will each technology dominate in.

In any case many device vendors have intimated their willingness to implement both 802.11b and Bluetooth, providing the incremental cost is not significantly higher than an 802.11b-only solution. The biggest obstacle outside the actual module implementation has been how to allow both technologies to coexist. This is critical because Bluetooth can (depending on the network topology) cause significant interference to 802.11b operation. Bluetooth itself is far less susceptible to interference from 802.11b.

Solutions to this problem will potentially take a number of different forms. Most importantly the Bluetooth SIG and the IEEE are working on adaptive hopping. Essentially this means that Bluetooth solutions will be able to sense the presence of 802.11b channels in operation and will modify their hop pattern so to operate in the portion of the spectrum not occupied by 802.11b.

In any case many industry participants are hopeful that 802.11a, the next generation wireless LAN operating in the 5 GHz band, will be rapidly adopted. If this happens wireless LANs can migrate into 5 GHz spectrum leaving the 2.4 GHz band for Bluetooth.

The Outlook

The outlook for Bluetooth technology is once again positive, albeit cautiously so. Bluetooth at its core is an embedded play. The desire to purchase add-on, aftermarket Bluetooth solutions is limited. For Bluetooth to succeed integration cost and power consumption are key determinants. The evidence is that the kinks with Bluetooth technology are being worked out and as silicon vendors develop more cost-effective solutions this will positively impact shipments of Bluetooth-enabled solutions.

Navin Sabharwal is Director of Residential and Networking Technologies with Allied Business Intelligence. He has authored numerous studies on residential connectivity and wireless networking.

Allied Business Intelligence Inc is an Oyster Bay, NY-based technology research think tank that offers expert advice and research on wireless, broadband, and emerging technologies. Details can be found at www.alliedworld.com or by calling 516-624-3113.