Wireless Growing Pains

Market grows, but some companies wait for it to mature

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By Jill Gambon
Issue date: Jan. 29, 1996

Medical supply company F.D. Titus and Sons invested in a wireless network four years ago so its sales representatives could place orders more quickly and guarantee customers next-day delivery. The company planned to move fast, but the project hit repeated snags: Off-the-shelf applications were nonexistent, suitable hardware was scarce, and convincing hard-charging sales reps to learn a new way of do ing business wasn't easy.

As a result, the system took far longer than expected to set up: The company completed a pilot project last summer and is adding 40 people to the system each month. By the end of 1996, more than five years after the City Of Industry, Calif., company decided to go wireless, the 900-person sales force is expected to be transmitting customer orders to headquarters over circuit-switched cellular networks by cabling IBM portables to Motorola flip phones.

By the time all the sales reps are on board, the company may be ready to convert to a packet radio service, a proprietary data communications technology that wasn't feasible when the wireless project began.

"Things have finally started coming together with hardware and software," says Tim Titus, VP of corporate development for the company, which was acquired by General Medical Corp. of Richmond, Va., last year. For Titus, the move to wireless has been a long and frustrating experience- one he's not s ure he'd repeat despite the improved turnaround time in shipping customer orders.

Titus' experience is a lesson in the issues facing businesses eager to take advantage of wireless technologies. Unrealistic expectations, an immature infrastructure, a paucity of applications, a lack of standards, and the absence of some of the leading technology companies are some factors that have held wireless back.

At MCI, for example, an aggressive sales-force mobilization program is under way--but the telecom carrier has put off introducing wireless connectivity to its 5,000-member roving sales staff until later this year at the earliest. In addition to the headaches of training and support, the lack of an affordable, ubiquitous network has relegated wireless connectivity to a back burner, says Ken Donaldson, MCI senior manager of field automation systems management in Atlanta.

Despite these setbacks, wireless is taking root in niche markets with mobile workers in field sales, field service, tra nsportation, and most recently health care. According toGiga Information Group (formerly BIS Strategic Decisions Inc.), a market research firm in Norwell, Mass., the number of wireless data users in the United States grew from 190,000 in 1992 to 1.3 million in 1995. Network standards are emerging and hardware is getting more user-friendly and less expensive.

But the promise of ubiquitous mobile communications for the masses is still years away from widespread use by corporate America.

Part of the reason wireless seems like such a chronic underachiever is sheer hype. "Technology always takes longer to employ than people believe," says Andrew Seybold, editor of a mobile computing newsletter.

Also, expectations for wireless have been unrealistic. "Wireless networks are not going to be as high- speed and robust as wired networks," Seybold says. "They're always going to be a generation behind."

While people using wired networks are accustomed to t ransmitting data at 28.8 Kbps, information traveling over wireless networks generally moves between 4.8 Kbps and 9.6 Kbps because of bandwidth constraints.

Vendors of wireless products and services are undergoing a major retrenchment, revising strategies to target markets such as field sales that need very specific applications, says Bill Frezza, president of Wireless Computing Associates in Yardley, Pa. "There's slow, steady progress in the vertical markets-but the exponential growth hasn't materialized yet," he says. Corporate road warriors aren't willing to pay a huge premium for wireless services to access E-mail.

Depending on the network used, wireless connections can cost several times more than land-line services. But Frezza expects wireless pricing will plummet as Personal Communication Services (PCS), digital wireless voice and data services that will operate at higher frequencies than cellular networks, hit the market. Last year, telecom carriers, information technology firms and media companies ponied up $7 billion to the FCC for licenses to operate on PCS frequencies. Many of those companies are in the process of building their networks and starting trials.

High Hopes
Giga projects that by the year 2000, nearly 10 million people in the United States will be using wireless networks to transmit data, up from fewer than 1 million today. Companies that can figure out how to tap that market are poised for dramatic growth: Giga projects that in the U.S., wireless data services, which include cellular, narrow-band PCS, packet radio, and satellite, now a $437 million industry, will reach $4.2 billion by 2000.

User uncertainty about which technology to bet on is also inhibiting the wireless market. "People have been reluctant to embrace a particular wireless network," says Barbara Pistilli, director of marketing communications for radio systems at Ericsson Inc. in Totowa, N.J. John Krachenfels, manager of business development for Oracle's mobi le systems division, agrees. "Many people are saying 'There's Ram, Ardis, and CDPD [Cellular Digital Packet Data]. What's going to be the standard?'," he says.

While companies like Titus transmit data over circuit-switched cellular networks, others use packet radio networks operated by Ardis, a division of Motorola, and Ram Mobile Data, which is partly owned by BellSouth. These networks, which break information into bundles, are best-suited for sending short bursts of data such as E-mail; they're not efficient for transferring larger files. The cost of transmitting a four-page newsletter with graphics over a packet radio network would run between $21 and $55.

Both Ram and Ardis operate nationwide and provide service to some rural areas. Though both companies are growing, Ardis has just 47,000 customers; Ram counts 36,000.

Some industry observers don't believe Ram and Ardis will survive. "There are so many factors that don't line up here," says Ira Brodsky, presi dent of Datacomm Research Co. in Wilmette, Ill. He cites the time and money companies must pour into applications development as the biggest problem.

Rob Euler, formerly senior VP of corporate strategy at Ardis, naturally disagrees. "Sure, the next great thing will be better than what you can buy today, but our customers can't wait." Ardis scored a coup last year by signing Sears, Roebuck and Co.'s 14,000-technician service fleet.

Brodsky believes packet radio networks will be eclipsed by emerging PCS and CDPD networks. CDPD is also a victim of excessive hype and has yet to live up to the promise made by cellular carriers when they began rolling out the service in 1993. CDPD adds data capabilities to the cellular phone system by breaking information into packets and sending them at a true rate of up to 9,600 bps through unused radio channels or between pauses in cellular conversations.

Getting Legitimate
Editor Seybold says the market needs Microsoft and Intel to add legitimacy. Microsoft abandoned efforts to develop its WinPad PDA operating system in 1994; instead, it has quietly been working on a successor project, code-named Pegasus--but won't talk about it. "We haven't announced any products, but we've made it clear we want to see good wireless data networks," says Jon Magill, personal systems division manager at Microsoft.

At Intel, three groups are working on wireless projects, says John Antone, marketing manager of Intel's mobile products group. After investing heavily in PDA development two years ago, Intel has shifted its focus to optimizing Pentium notebooks for wireless computing and adding intelligence to cellular phones. In October, Intel announced the development of a mobile version of its 32-bit Peripheral Component Interconnect (PCI) Triton chip set, which helps boost performance of mobile applications, Antone says.

While companies like General Medical have made productivity gains with the wireless network, Titus says t hose advances were hard-won. For other companies considering wireless, he has some simple advice: "Make sure there's a strong business reason for it before you start investing. Wireless is always going to be more expensive than wireline."

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