Intersil riding high on adoption of IEEE 802.11: Wi-Fi beating Blue-tooth to the punch

Electronic News, Nov 19, 2001 by Tom Murphy

Amid the gloomy market conditions of 2001 a d the backlash that hit the wireless industry this year, one wireless technology seems to be ramping up, and one company is well positioned to take advantage of that ramp.

Unlike its tirelessly over hyped wireless brother Bluetooth, wireless LAN (WLAN) technology, based on the IEEE 802.11 standard, is actually shipping in actual products. And Intersil Corp., makers of 802.11 chipsets since 1998, enjoys the market-share lead.

At the Comdex show last week in Las Vegas, Bluetooth-enabled devices littered the showroom floor. So, too, did devices equipped with 802.11b technology, the one that Intersil dominates.

But this wireless LAN technology, affectionately known in some circles as Wi-Fi, is gaining momentum as a home networking solution and in small and medium enterprises, according to analysts. The momentum is largely due to a drop in price for the chipsets, one analyst said. In a year like 2001, it's hard to find growth areas in any technology segment. Yet, Intersil reported that orders for its PRISM WLAN products grew more than 20 percent in the third quarter.

Sales for Intersil in the third quarter were $113.4 million, a decline of 4.1 percent compared to the previous quarter but above previous guidance. Adjusted net income was $11.1 million, or 10 cents per diluted share of common stock, surpassing consensus expectations, according to a company release.

The market is still growing, though. In 2002 an estimated 6.1 million 802.11-capable network interface cards are scheduled to ship, according Gemma Paulo, an analyst with Cahners In-Stat, which is owned by Cahners Business Information, the parent company of Electronic News. Through three quarters, more 802.11 chipsets shipped this year than all of last year. Some estimates peg the 802.11 market to grow to $5 billion by 2005.

Of course, with the dearth of spending on IT this year, it's no surprise to learn that larger enterprises are not adopting 802.11 in large numbers, Paulo said. Small and medium business are finding the technology useful, especially when they weigh the cost of installing an Ethernet infrastructure instead.

The industries that seem to be the initial adopters of 802.11 technology include healthcare, education, freight distributors and those with traveling sales forces and multiple offices, Paulo said. Residential use seems to be a key early adopter as many people with high-speed Internet lines look to use WLAN to distribute the service over several PCs.