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MARCH 13, 2003 NEWS ANALYSIS PC-Tel: Leaner, Cleaner, and Wireless [Page 2 of 2]
Also, Wi-Fi networks can get bogged down by interference from other radiowave traffic. So PC-Tel plans to acquire technology that examines networks and helps clear interference. Among other things, such technology will allow the development of applications that boost the security of voice and data traffic-a key concern for users of Wi-Fi gear. On Mar. 12, PC-Tel used $10 million of its $112 million in cash to buy Dynamic Telecommunications, a developer of software-defined radio technology. And Singer is prowling the market for other technology that optimizes the performance of broadband networks. PC-Tel also seeks to cure another source of Wi-Fi trouble: Different components can be hard to install. PC-Tel says retailers complain that about half of the Wi-Fi network cards they sell are returned by customers who can't figure out how to get them to work. So PC-Tel is introducing products that make installing the cards and connecting to networks a snap. Soon, it will introduce technology that will enable a homeowner to connect without having to buy and install all sorts of routers and other hardware. "If this industry is poised to take off, Wi-Fi has to be easy to use," Cummins says. "That's where PC-Tel comes in." "BIGGER GAME." Problem-solving products such as its roaming software came to only about 1% of PC-Tel's sales in 2002. But as its products make the transition from trials at wireless carriers to commercial applications, PC-Tel estimates sales from wireless products will grow to 10% of total sales in 2003 and as much as 40% in 2004. "We want to participate in a much bigger game," says business development chief Miller. Making a big impact won't be easy. Heavyweights like Cisco Systems (CSCO ) currently dominate the Wi-Fi equipment market. And other big shots, such as chipmaker Intel (INTC ), are moving swiftly into the market. At the moment, neither Cisco nor Intel focuses on software, but they easily could. In fact, a giant like Cisco could easily buy a player the size of PC-Tel to acquire its technology. Plus, PC-Tel has other small rivals to worry about, such as iPass and BVRP Software. And there are questions about whether PC-Tel can develop relationships with the dominant Wi-Fi carriers managing the networks. Carriers such as T-Mobile and AT&T Wireless (AWE ) are building separate networks, but PC-Tel has yet to strike up a partnership with either. Even if it ultimately does, big questions remain about how security and billing will be handled for users that roam between networks. Planning for the future doesn't mean PC-Tel is neglecting its bread-and-butter business. Right now, the majority of its operation still focuses on conventional modem software. PC-Tel has several patents essential to the standards for 56k modems -- still the most widely used modem in the consumer market. The company generated $5.5 million in royalties in 2002, up from $300,000 in 2001. "We're not going to throw away our past as we move into wireless," Singer says. Now that the mess is cleaned up, PC-Tel looks well-positioned to step boldly forward.
 By Roger O. Crockett in Chicago Edited by Patricia O'Connell Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | MARCH |
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