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Bringing Up Bluetooth.

From test tube to teething--the birth of an industry standard ain't easy. But now that a consortium of electronics companies has nurtured the much-heralded Bluetooth into fruition, the first of a new generation of gadgets and gizmos are trickling forth. Stephen A. Booth reports on toys and tools to come--and how they will change our lives.

Picture this. You're a modern day road warrior preparing for yet another business trip. So you transfer your itinerary from an office PC to a handheld personal digital assistant--without snaking cables from the PC to the PDA. You stroll outside to your car while chatting with a colleague on your cell phone and, as you get in, your conversation switches seamlessly to a hands-free system built into the automobile.

When you fire up the engine, the car's onboard Global Positioning System (GPS) navigation module senses the PDA in your briefcase. They shake hands electronically and the GPS extracts your itinerary from the PDA and begins dictating traffic directions to the first appointment of the day. Once there, the traditional exchange of business cards between you and your client or partner can be done electronically, through your respective PDAs, and documents--contracts, background materials and such--traded the same way.

Back at the hotel, you power up your laptop PC and retrieve e-mail without tapping in through the hotel's switchboard--without, in fact, connecting the PC's modem to anything. Instead, it accesses the Web through your cell phone, stashed with your jacket in a nearby closet, and could have done so just as easily through the car's hands-free phone. If an e-mail message should bring a change of itinerary, a cancellation or a new location for a meeting--that information can be immediately transferred to your PDA, which will then fetch new directions from the car's GPS.

Wireless connections for electronics and telecommunications devices have been around for a while. Typically they employ infrared light, which requires line-of-sight transmission and user-initiated commands to function properly. What distinguishes the system envisioned above is its use of radio waves that can travel through and around objects to exchange information. Called Bluetooth, it's all part of a short-range communications standard that makes its debut this year following more than two years of development by a global consortium of high-tech companies.

Bluetooth takes its name from Harald Blatand (Blue Tooth), the 10th-century Danish king who cudgeled neighboring Viking chieftains into unifying Denmark and Norway. Even Bluetooth's trademarked logo comes from the Norse runic letters for H and B. Name and logo evince the new technology's partially Scandinavian heredity. Finland's Nokia and Sweden's Ericsson were among the founders of the Bluetooth Special Interest Group (BSIG), which administers and tests the standard and also counts 3Com, IBM, Intel, Lucent, Microsoft, Motorola, and Toshiba as members. Their goal was to further merge the PC and telecom worlds by replacing the slow and cumbersome cables and wires that heretofore have linked them.

Besides these companies, nearly 2,000 others worldwide have adopted Bluetooth for a cornucopia of soon-to-arrive and blue-sky devices. The first products will just trickle in this year--a .75 ounce wireless headset for cell phones from Ericsson and, from Motorola, add-ons such as a Bluetooth PC card and a Universal Serial Bus adapter to retrofit existing PCs.

Ericsson estimates the installed base of Bluetooth products will reach between 1 billion and 1.5 billion users by 2005, when another 500 million to 1 billion products will be sold. According to Cahners In-Stat Group, revenues will top $1 billion by 2002 and $3 billion by 2005. Cahners also forecasts annual unit volume at about 700 million Bluetooth devices by 2005.

The Viking's B2B Fallout

While the proponents and pundits count chicks that have yet to hatch, Bluetooth's royalty-free technology has already spawned a rash of B2B deals. The radio transceiver chips alone look to be a $1 billion market next year, according to Cahners' forecast.

No surprise then that digital set-top receiver manufacturer Broadcom offered $440 million in June to buy Innovent Systems, which makes microprocessors for Bluetooth products. Broadcom said it plans to integrate Bluetooth communications in its set-top boxes and cable modems. Motorola has announced it's working with IBM and Toshiba to develop Bluetooth-based PC products. And at June's PC Expo in New York City, Big Blue showed a prototype WatchPad--a wrist-worn FDA that would use Bluetooth to sync data with portable and desktop PCs.

Among other recent transactions, PDA-maker Psion agreed to supply PC makers Compaq and Dell with Bluetooth add-in cards for their computer products, and TDK Electronics will do the same for IBM's ThinkPad portables. Psion's won't be the only PDA with Bluetooth: Palm also is a Bluetooth adopter--and has licensed Sony to build and sell a Sony-branded version of the Pilot (Sony was to have begun sales in Japan last month, with U.S. availability in fall.) Meanwhile, Microsoft said it will adapt Bluetooth technology for Windows CE handhelds by this fourth quarter, and for Windows 98 and 2000 in next year's first half. The PC software sumo is also working with Intel to develop Bluetooth connectivity between PCs and cell phones.

Bluetooth achieves its wireless communication over the 2.4 gigahertz (GHz) radio band, or 2.4 billion cycles per second. By comparison, a typical AM radio station operates in the kilohertz (kHz) range, or thousands of cycles per second. The 2.4 GHz band is a slice of radio spectrum available in most industrialized countries except France, where it's reserved for military communications.

According to a Motorola spokeswoman, negotiations are under way with regulatory bodies worldwide to accommodate Bluetooth's working frequency. At our deadline, the necessary clearances for France had yet to be resolved--and probably won't be addressed before fall, as France is the nation that vacations en masse in July and August. It's also the only country that uses a different TV operating standard (SECAM) than both the rest of Europe's PAL and the NTSC standard used in the U.S. and Japan and most of the Western Hemisphere.

As currently conceived, Bluetooth products broadcast on very low power, yielding a range of 10 meters (about 33 feet). But the technology's proponents claim this can be increased tenfold in the future, and that power output and distance will be determined by the function of individual devices. In other words, while a short range will do for a PDA swapping data with a PC, other applications--such as enabling a centrally located stereo system to transmit music to amplified loudspeakers in rooms throughout a home--might require greater range.

Besides reach, the other key factor of Bluetooth is its bandwidth, or the rate at which it can transmit data. In the current manifestation, that rate is a maximum of 1 Mbps. Bluetooth's top speed thus is about 18-times faster than "dial-up" 56-Kbps modems. At 1 Mbps, Bluetooth plays in the same ballpark as today's cable- and DSL telephone modems. But is it fast enough?

According to the BSIG, a 1 Mbps rate is "enough bandwidth for the designated usage models" --meaning it has a broad enough pipe to handle data and voice communications among phones, PDAs, and PCs. But more bandwidth would be needed to transmit high-resolution motion video of, say, DVD or DirecTV satellite TV quality. This could be done, though, when greater compression technology, such as the MPEG-4 system now being standardized by the Motion Picture Experts Group, becomes available for video. MPEG-4 will make it easier to shoehorn higher resolution video through narrow pipe than is possible with the MPEG-2 compression now used for DVD videodiscs and satellite- and terrestrial-digital TV.

Privacy Please

Security--always a concern when transmitting sensitive business or personal data--remains a challenge, particularly as signals shipped across publicly owned airwaves can be among the least secure. But according to the BSIG, Bluetooth incorporates "sufficient encryption and authentication and is thus very secure in any environment." The group also notes that the technology employs a frequency-hopping scheme within the 2.4 GHz band, performing 1,600 hops per second (so-called spread spectrum" cordless phones also vary their frequency within the band).

Bluetooth's backers further point out that the system automatically adapts its transmission power-output to precisely match the distance between communicating devices. Additionally, software controls and identity-coding built into the Bluetooth chips enable communication only between those devices that the user has preset to do so. In other words, the person with Bluetooth devices in the hotel room next door to yours shouldn't be able to pick up emissions from your Bluetooth toys.

The BSIG says this combination of security levels "makes the system extremely difficult to eavesdrop." Additionally, the BSIG claims that Bluetooth can accommodate higher layers of security, such as passwords and PINs.

Besides freedom from a rat's nest of wires--or from having to haul a tangle of varying connector cables when traveling--Bluetooth's proponents tout other benefits for the standard. These include device-to-device data sharing, as well as device control. Unlike unidirectional infrared light communications, Bluetooth enables transmission to more than one device at a time. Under the current standard, it's possible to establish a "personal area network" (PN) linking one Bluetooth-enabled device to seven others, with one acting as the ramrod and the others as "slaves" or satellite devices.

Bluetooth will also bring new functions to existing products, its backers say. One such function is automatic synchronization among desktop, mobile PC, PDA, and mobile phones. Because all Bluetooth devices automatically detect one another's presence when their current 33-foot range, a PDA can be set to automatically update the addressbook or calendar in a desktop PC when the owner enters his or her office and vice versa.

Another Bluetooth feature that brings new flexibility and functions to an existing product is Bluetooth's "three-in-one" concept for cellular phones. When you're mobile, the cell phone performs as usual, making and receiving calls through cellular grid (and at cell-phone charges). But when one Bluetooth cell phone comes within range of another, they can function like walkie-talkies and you can communicate for free.

Perhaps best yet, when you're in your home or office, the mobile phone will operate as a cordless portable tied to the residential or business-phone line--linked by Bluetooth to the location's fixed phone line and billed as such instead of at cellular tolls. With pervasive use and downsliding rates, these days hefty cell-phone bills are shrugged off as a necessary cost of doing business. But coupling greater convenience with cost efficiency never hurts--and rates good for business entities' bottom lines might just win over the masses. At least, that's what the telcom bean counters foresee. As they handicap it, Bluetooth's ability to merge residential with mobile service is the incentive that gets cell-phone holdouts to make the leap from pay phones to paying phones. The next step--to moms' and teachers' always-connected PDAs and the sub-$100 PC in the child's bedroom--is the big pay-day.

Conquering the world, one market at a time--king Harald would be proud.
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Publication:Chief Executive (U.S.)
Date:Aug 1, 2000
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