The Magic of Wi-Fi

Every wireless Internet convert has a Wi-Fi moment -- the instant when the person realizes that computing as it has previously existed is over. Think of it like Napster. In 2000, the rogue file-sharing service woke up tens of millions of music lovers to the fact that they had an alternative to paying $18 for a CD. Today, ultrafast wireless Internet connections are proving to millions that even with their pricey laptops, they were never really mobile -- until now.

Across the world, thousands of people each month are having their own Wi-Fi moment. The growing ranks of New York City's unemployed are discovering that, with a $50 network card, it's as easy to zap an e-mail and résumé from wireless access points -- known as hot spots -- at Bryant Park or Starbucks as it is from their bedrooms. Former Napster aficionados are wirelessly linking their PCs to their stereos to better enjoy their MP3 collections.

AD HOC HUB. For thirty-year-old London TV producer Fred Casella, his Wi-Fi moment came on a ski trip to Switzerland. The apartment he and a friend were staying in had only one phone jack with a 56K dial-up connection -- and both wanted to check their e-mail. Casella used the 56K connection connection and a built-in Wi-Fi card on his Apple PowerBook to turn his laptop into an ad hoc hot spot, allowing them to check mail quickly and get back on the slopes.

What is it about Wi-Fi that's setting hearts aflutter -- and not just at Starbucks, but at tech giants such as Intel, who want in on the action? For one thing, the technology is easy to understand. A recent study by polling firm Ipsos-Reid reveals that 41% of Americans are aware of Wi-Fi -- an impressive demonstration for a technology companies began marketing to consumers just two years ago.

"Wi-Fi is a combination of high-speed Internet access and cell phones," says Mark Laver, a senior analyst at Ipsos-Reid. "It's an adaptation of other technologies we already know and love." That makes Wi-Fi akin to two of the fastest-growing technologies in recent memory: Cell phones, which offered portability, and DVD players, which proved superior to VCRs thanks to clearer images and lots of extras.

"NO HASSLE." In the past decade, 137 million Americans have purchased a cell phone, and more than 35 million now have a DVD player, up from hardly any just three years ago. Compare that to digital video recorders such as TiVO (TIVO

) -- a truly revolutionary technology that lets users pause live TV programming. Yet TiVO has signed up just 510,000 subscribers in five years.

Even better, Wi-Fi is easy to use. "With no wires, it seems like magic," muses Ezra Goldman, a venture capitalist who used early incarnations of Wi-Fi as early as five years ago. Besides having a wireless network set up in his home so he, his four children, and their six laptops can share files, printers, and Internet access, Goldman and his partner Rob Lachman require that all the companies they invest in set up a Wi-Fi network. "That way, when we arrive, it's no hassle. We just sign in and start working," he says.

Wi-Fi lovers like Goldman have tech companies excited for the first time since the dot-com bubble burst. This week, at the Cellular Telecommunications & Internet Assn. conference in New Orleans, the buzz was all about Wi-Fi, which carriers see as a bright spot in an otherwise gloomy outlook. No. 1 U.S. wireless provider Verizon Wireless opened the show by announcing that its subscribers soon will have Wi-Fi access at hundreds of hotels and 10 airports.WITH BOOKS AND BURGERS. That news came just a week after Intel (INTC

) launched its $300 million marketing campaign for its new chip family, called Centrino, which caters specifically to wireless users. Along with primetime-TV spots and glossy magazine spreads, Intel is creating "mobile technology zones" at a dozen airports worldwide where travelers can test Centrino-based notebooks and wirelessly surf the Net.

The chip giant is also behind plans to offer hot spots at 400 Borders Book & Music stores (BGP

). And on Mar. 12, Cometa Networks, a startup backed by AT&T (T

), IBM (IBM

), and Intel, unveiled hot spots at 10 McDonald's (MCD

) restaurants in New York City. McDonalds plans to "unwire" 300 restaurants by the end of the year.

And you can start looking for Wi-Fi at hotels, too. According to Boston-based Pyramid Research, 25,000 of them will offer Wi-Fi by 2007, up from just 1,000 in 2002. The reason: Business travelers are demanding high-speed Internet access. And Wi-Fi is less intrusive and cheaper to install than traditional wired solutions, costing on average about 25% less, Pyramid says. Already, Wi-Fi is available for free in the lobbies of 150 Wyndham hotels and the lobbies of select Hyatt and Omni Hotel properties, among others.

SOAP, IRONS, AND WI-FI? Smaller hotels also are jumping on the bandwagon. The Hampton Inn in Auburn Hills, Mich., spent $33,000 to install Wi-Fi, which it offers free to guests in all 124 rooms. The response has been tremendous, according to General Manager Tom Keller. On average, between 20 and 40 guests log on each day. Keller even provides wireless cards and a CD with the necessary drivers for laptop-lugging guests who've never used Wi-Fi. "If I can get them to stay one extra night, it pays for itself," says Keller, who sees Wi-Fi as giving him an advantage over competing hotels.

Moreover, after people try Wi-Fi at airports, hotels, and McDonald's, it won't be a huge leap for them to buy their own $50 Wi-Fi card and begin linking their homes and offices. Soon enough, people will come to expect Wi-Fi wherever they go. Keller predicts that it won't be long before hotel guests expect free Wi-Fi, just as they expect hair dryers, irons, even soap.

That's probably a few years off, since Wi-Fi still faces several challenges. Security is a major concern. If a salesperson is going to log into company databases from an easy chair in a hotel lobby, corporate technology departments want to be sure that the hacker sitting in the next chair can't. And if Wi-Fi service providers, such as Cometa Networks, Wayport, and Boingo, are going to persuade corporations to adopt the technology, the providers will have to cooperate with each other to offer a truly international network. After all, no one is going to want to pay to log in only at McDonald's or only at the airport. Ultimately, Wi-Fi's usefulness will depend on its ubiquity.

GRASSROOTS DEMAND. Of course, dozens of startups are planning to take on those challenges. Bluesocket in Burlington, Mass., is developing a family of wireless gateways that aim to enhance security and control user access. RovingIP.net, based in Bellevue, Wash., provides billing software for Wi-Fi service providers. Intel Capital is backing many of them with its $150 million commitment to Wi-Fi venture investments. Pyramid Research analyst John Yunker says grassroots demand for Wi-Fi means it's only a matter of time before such challenges are overcome.

Science fiction writer Arthur C. Clarke once wrote that "any sufficiently advanced technology is indistinguishable from magic." That's certainly true for Wi-Fi. And a little magic is just what beleaguered tech companies and road warriors could both use right now. By Jane Black in New York