Why Bluetooth Has a Black Eye

A new wireless technology called Bluetooth is supposed to provide a cheap and simple way to connect just about anything to just about anything else--phones, laptops, personal digital assistants, headsets, printers, you name it. Is Bluetooth for real? Or is it headed for the graveyard of Next Big Things that couldn't hope to live up to their hype?

As the first Bluetooth products hit the market, the signs are not good. Clearly, Bluetooth works. But it is vastly more expensive than anyone expected it to be at this point. Unless the high-tech companies working on Bluetooth get their acts together fast, the second fact could easily trump the first.

I've been experimenting with laptops equipped with Bluetooth PC Cards from 3Com (COMS). If two Bluetooth laptops come within range of each other--about 30 feet or less--and both are set to advertise their presence, each will show up as an icon in the other's Bluetooth device window, and they can transfer files back and forth. Note, however, that this is different from standard networking: Neither computer can see the other's files, and transfers only go to a special inbox. It's more like beaming files between Palms than a network file transfer.

There are at least two immediate problems. We don't need Bluetooth to exchange files between PCs; conventional networking does that just fine. The new technology is intended for such uses as letting your Palm exchange contact and calendar data with a PC without cables, or allowing your laptop to reach the Internet using your wireless phone as a modem. Furthermore, current Bluetooth products, including the 3Com cards and a forthcoming add-in card for the Palm m500 series, cost about $150 apiece. That's way too much to get rid of a cable.

Other problems loom down the road. Bluetooth must be a snap to use. A particular challenge is making it easy to manage connections using smaller devices, such as phones, that don't have big PC screens and easy-to-see graphics. Security options also have to be simple to understand and set. For example, you probably would be willing to let many people use your printer, a few people transfer a file to your computer, and allow no one to have Bluetooth access to your phone.

All of these difficulties pale, however, beside cost. Last summer, semiconductor suppliers were promising $5 Bluetooth chips by the end of this year. That would mean that the technology would add perhaps $25 or $30 to the price of a Bluetooth-equipped product. But prices have stayed stubbornly high.

To some extent, this is a chicken-and-egg problem. Semiconductor companies such as Broadcom (BRCM) and Cambridge Silicon Radio say prices will plunge once Bluetooth chips are produced by the hundreds of millions. But how will that mass market be born? Once upon a time, it looked as if wireless-phone makers would jump-start Bluetooth by subsidizing high-end handsets; Ericsson (ERICY) developed much of the original technology, and Nokia (NOK) and Motorola (MOT) are major backers of it. But handset makers are in no position to spend billions to seed the Bluetooth market. And other products are slow in coming: Only one Bluetooth printer, the Hewlett-Packard DeskJet 955c, has been announced for this fall, at an undisclosed price.

CHEAPER RIVAL. Another threat has been the explosive growth of Wi-Fi (also known as 802.11b) wireless Ethernet. While the two wireless methods are designed for different purposes, there is significant overlap in function. Either standard, say, could be used to sync handhelds or print wirelessly. While Wi-Fi is more complex and consumes more power, it is widely available today. It's also cheaper than Bluetooth, and its price is falling more rapidly. Some laptop makers who had planned to build Blue Tooth into this year's fall models are opting instead for Wi-Fi.

The Bluetooth faithful still believe that it will all come together. "Bluetooth is the way we want to connect Palms," says Michael Mace, chief competitive officer for Palm. But, he admits, "realistically, we're looking at another year" for widespread use. Even that will happen only if prices fall with a speed unprecedented even for semiconductors. By Stephen H. Wildstrom

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