The Future of Bluetooth Thafir Al-bazoon 24748 [email protected]

The ACM Computing Classification System: B.4.1, B.4.3, B.7.1, D.4.4 The ACM Special Interest Groups: SIGMOBILE - Mobility of Systems, Users, Data and Computing.

Index 1. Introduction 1.1 What is Bluetooth? 1.2 The aim of Bluetooth 1.3 The usage of Bluetooth 2. Future Growth Areas of The Bluetooth 2.1 Cell Phone Accessories 2.2 Computer Peripherals 2.3 Smart Appliances & Gadgets 2.4 Automotive Bluetooth 3. Market Analysis 3.1. Overview 3.2. 3Com 3.3. Ericsson 3.4. IBM 3.5. Microsoft 3.6. Market Analysis: Key Companies 3.7. Market Analysis: Porter's Five Forces Analysis 4. Big future for Bluetooth 4.1 Bluetooth future in mobile phone 4.2 Advantages 4.3 Bluetooth’s Challenges 5. Conclusion 6. References and links for further reading.

1.0

Introduction.

1.1

What is Bluetooth?

At first glance, the name seems to imply some sort of tooth problem. But upon a closer look, we see that this is a technology that will change the way we live our lives. The name Bluetooth comes from the ancient Norse king, Harald Bluetooth, whose name in Danish ("Harald Blåtand") was probably taken from two old Danish words, "blå" meaning dark skinned and "tan" meaning great man. However, and more importantly, he managed to unite several unruly kingdoms in the Old Norse world and convert them all to Christianity at the same time. This is exactly what Bluetooth is trying to do. It is designed to unite and connect several unruly technologies and convert them all under a single set of rules. Imagine not having to worry about plugging that new printer in, or imagine transferring your personal calendar from Microsoft Outlook on your desktop to your PDA and cell phone without having to connect any cables to your PC or press any buttons. How is this possible? Bluetooth, that’s how. Bluetooth is a revolutionary new technology that makes this a reality. There are nine main companies promoting Bluetooth - 3Com, Ericsson, Intel, IBM, Lucent, Microsoft, Motorola, Nokia and Toshiba. In the last few years over 2,000 vendors have joined them in their enthusiasm for the technology, ranging from CD player to VCR to microwave to washing machine developers.

The main purpose of Bluetooth is to define a standard specification for a way to connect a wide variety of electronic devices using a low-cost, short-range, and low-power wireless standard. It is designed to be used to connect both mobile devices and peripherals that currently require a wire, such as printers, mice and keyboards. As a form of "USB without wires," Bluetooth aims to become the dominant wireless data transmission standard.

1.2

The aim of Bluetooth

The aim has been set quite hight. It is to arrive at a specification for a technology that optimizes the usage model of all mobile computing and communications devices, and providing: • • • • • • • •

1.3

Global usage Voice and data handling The ability to establish ad-hoc connections The ability to withstand interference from other sources in open band Very small size, in order to accommodate integration into variety of devices Negligible power consumption in comparison to other devices for similar use An open interface standard Competitivelly low cost of all units, as compared to their non-Bluetooth correspondents. The usage of Bluetooth

• • • • • • • • • •

Phones and pagers Modems LAN access devices Headsets Notebook computers Desktop and handheld computers Printers Fax machines Keyboards Joysticks

Example of Applications: •

A Bluetooth-mouse could be used at a further distance from a monitor, and while moving about in the room.

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A Bluetooth-keyboard could be used further away from the monitor. This would reduce eyestrain for persons who are long-sighted. Increasing the distance would also reduce exposure to electromagnetic radiation from the monitor.

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A Bluetooth-keyboard could also be used to address more than one computer, in a dynamic, switchless manner.

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Use e-mail while your portable PC is still in the briefcase! When your portable PC receives an e-mail, you'll get an alert on your mobile phone. You can also browse all incoming -e mails and read those you select in the mobile phone's display.

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A travelling businessman could ask his laptop computer to locate a suitable printer as soon as he enters a hotel lobby, and send a printout to that printer when it has been found, and replied in a positive manner.

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Cable-less connection to printers and faxes.

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Cable-less connection to digital cameras and video projectors.

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Cordless connection from cell phone to handsfree headset.

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Bluetooth interface to office PBX.

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Dial-up networking and automatic e-mail.

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Use cell phone as office cordless phone.

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Use of PC or PDA as handsfree phone.

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Automatic exchange of files, electronic business cards, calendars etc.

2.

Future Growth Areas of The Bluetooth

2.1

Cell Phone Accessories

From wireless headsets, to synchronization tools, to digital cameras, Bluetooth will find its way to the masses through this channel. There are already several products in the marketplace that are beginning to utilize the Bluetooth advantage. Some of the most popular devices available today are the wireless hands-free cell phone headsets. This is just one simple application of Bluetooth as a way to rid popular electronic devices of messy cables. Some other examples of this are multiplayer cell phone games that you can play with friends or strangers (the ice-breaker of the 21st century?), digital cameras that can wirelessly send pictures to your cell phone for distribution to friends and family, and PDAs that automatically synchronize with your cell phone and personal computer whenever they are in close proximity. All of this and more is already possible with Bluetoothenabled devices and only time can tell what else is coming. The market for Bluetooth mobile handsets will grow from 26.2 million in 2002 to reach almost 100 million in 2003, according to the ARC Group. Globally, the Bluetooth handset market is set to really take-off in 2003, when volume production of chips and the introduction of 3G networks combine to boost the Bluetooth handset market. Another report from ARC Group Bluetooth -- Personal Area Networks, predicts continued growth through 2004 as increasing numbers of handsets and operators support the technology. By 2006, ARC Group estimates that 779.7 million handsets sold will be Bluetooth-enabled, which represents 71 per cent of devices sold in that year. According to analyst firm the Zelos Group, by 2006 adoption and sales of Bluetooth wireless technology will result in $2.6 billion of incremental revenue for mobile operators in the US.

Plantronic M1500 Bluetooth Headset & Cellular Phone Adapter (Works with Any Cellular Phone with a 2.5 mm Adapter)

2.2

Computer Peripherals

Another growing market for Bluetooth is the computer peripherals industry. Enabling keyboards, mice, printers, speakers, scanners, and any other peripheral with Bluetooth will allow computers to be setup quickly, with less mess and greater ease. This will also lead to feature-packed peripherals such as printers you can use with your PDA and other innovative devices.

2.3

Smart Appliances & Gadgets

Imagine your refrigerator automatically detecting what groceries you need and sending a grocery list to your cell phone as a convenient way to go shopping. And as you come home late one night, your driveway lights turn on and your front door unlocks itself as you press your thumb onto your fingerprint-ID capable cell phone. The future applications of Bluetooth are really endless. Bluetooth technology could potentially be utilized in almost all everyday products. For instance, IBM researchers are presently working on a number of personal devices, such as the WatchPad that could be connected with other devices through Bluetooth. The WatchPad is a small wristwatch device that can download train/bus schedules, automatically set the time and also provides all the other features of a basic PDA and universal TV remote.

2.4

Automotive Bluetooth

Another mass market that will soon be penetrated by the Bluetooth standard will be automotive industry. With the hassle of plugging your hands-free headset into your cell phone every time you get into your car causing people to not use these hands-free kits, a big safety hazard is growing. Bluetooth will solve this problem as you will soon be able to buy a wide variety of kits that will Bluetooth-enable your vehicle so that you can use your cell phone conveniently and safely. Step into your car, throw your cell phone on the seat or center console and you’re ready to talk – no plugs, no cables, no unsightly cigarette-lighter-mounted cell phone stands. With voice-activated controls or integrated steering wheel controls, you’ll be able to make and receive phone calls without the hassle of messy, distracting, and unsafe wires

3.

Market Analysis

3.1

Overview

Bluetooth technology is unique in that, as a standard, the main players in the market are very diverse and wide-ranging. They include software and hardware developers in markets from personal computers to peripherals, cars to personal electronics, and mobile devices to measurement equipment. With all of these diverse players, it is difficult to define the exact market for Bluetooth. By many accounts, however, the market for Bluetooth solutions will experience heavy growth in the coming years. The following is Merrill Lynch’s estimate of market growth in the Bluetooth chip market through 2005. The following companies are at the forefront of those implementing Bluetooth, and are in the best position to profit from this predicted market growth.

3.2

3Com

3Com Corporation, which sells networking hardware and software, is a publicly traded company that is listed on NASDAQ (COMS). They are a large company whose main Bluetooth offerings are PC cards and wireless UBS adapters. These devices allow users to connect laptops or cellular phones to the Internet without wires, and they enable computers to connect wirelessly to peripheral devices like Bluetooth-enabled printers. 3Com’s main competitors in the networking space are CISCO, Enterasys, and Nortel Networks, and other wireless standards like wireless LAN and WiFi are substitutes. Customers of 3Com’s Bluetooth products are businesses and individual consumers, and suppliers are basically providers of commodity goods like silicon for the chips. As a $1.8 billion company, they are in an excellent position to provide Bluetooth products to a growing market. 3.3

Ericsson

Telefonaktiebolaget LM Ericsson (NASDAQ: ERICY) is a $15 billion company and the world’s leading maker of wireless telecom infrastructure equipment. They have several lines of Bluetooth products including: Radio Transceivers, Multi Chip Modules (MCM), and Baseband Controllers. As a maker of technologies as advanced as these, Ericsson’s customers are usually other businesses, and not direct individual consumers. Like 3Com, their suppliers are makers of commodity goods

like silicon and other materials needed to make these chips. Ericsson’s biggest competitors are Motorola, Seimens, and Nokia, and substitutes would be other wireless technologies. Motorola and Nokia are also companies that are developing products with Bluetooth, though they are more involved with integrating Bluetooth into their cellular phones than providing the equipment for other networking uses like Ericsson.

3.4

IBM

International Business Machines Corporation (NYSE: IBM) is the world’s largest computer hardware manufacturer, the second largest software producer behind Microsoft, and a company that possesses a huge service arm. As such a large company, they are one of the leaders in the continued development of the Bluetooth standard and products. Currently, they provide a wide range of Bluetooth products. One of the newest is BlueDrekar, a protocol driver that is IBM’s middleware that allows Bluetooth products like cell phones and household appliances to communicate with each other. Again, the substitutes to their Bluetooth products are those that do the same types of things but are based on a different wireless standard, suppliers are the makers of commodity goods, and customers are businesses who will use these devices in their products and consumers who will buy them directly. Their main competitors are Microsoft, Hewlett-Packard, and Sun Microsystems 3.5

Microsoft

The Microsoft Corporation (NASDAQ: MSFT), the world’s leading software producer, has just enabled its newest operating system Windows XP with Bluetooth. Now, any devices that use the Bluetooth standard will work with PCs running Windows XP. Microsoft believes that this move will have a significant impact on the Bluetooth market, which they predict will grow from $76.6 million in 2001 to $2.6 billion in 2006. In addition to this, Microsoft now has a line of their peripheral devices like mice and keyboards that operate wirelessly with the Bluetooth standard. Substitutes for these devices would be peripherals that operate on infrared and other wireless standards. The customers of such hardware and software products are companies and individual consumers, and their main competitors are IBM and Sun Microsystems

3.6

Market Analysis: Key Companies

Currently, most of the players in the Bluetooth market are very large companies who are in the process of developing new technologies and improving the Bluetooth standard. Though some (Ericsson, Motorola, and Nokia) compete in terms of selling similar Bluetooth-enabled products, there is currently more of a cooperative effort through the Special Interest Group (SIG), to further develop and promote the Bluetooth standard over other wireless technologies. Right now, the cooperation is a result of the network externalities that exist with such a communication standard the more companies that adopt it, the more such companies will make in the market. Current market leaders are large companies who have the resources to devote to substantial research and development efforts. They want to be there when the market explodes, as it is predicted to do in the next five years. This is a current barrier for smaller firms: they don’t have the resources to be the pioneers like these larger companies. Once the market takes off, however, these smaller firms will probably be able to enter the market with products of their own. Bluetooth is just beginning to break into the telecommunications market so it is difficult to say for certain who will succeed. However, it will be a fact that the companies who can leverage a competitive advantage in the industry will be the market leaders. A competitive advantage can be established with economies of scale by producing the products at a cost advantage over other competitors to meet the consumer demand. The market has yet to explode yet, but growth predictions are very high. The companies that can accurately predict the demand in the future and meet it will be the most profitable. It stands to reason that companies, such as IBM, Microsoft and other SIG members that have invested large amounts of money in research and development will find themselves at the forefront of this market. Market expert, Andrew Seybold of Seybold Consulting, remarks "there are too many standards, too many different frequencies, too many other issues. Bluetooth solves all of that." But despite the sunny forecast that Bluetooth is receiving, there are still technical barriers to adoption that remain before Bluetooth can become a widespread reality. Seybold commented on the problem that "the convergence between the telecom and computing industries is a lot harder then just voice communications" with data there are several pieces missing, one of which is easy connectivity between the computer and all the different types of phones. The other is the connections from the wireless network back to the corporate LAN, which is often protected by firewalls." Bluetooth aims

to solve this problem, but this won’t happen overnight, there are still significant challenges this new standard faces before it will experience widespread acceptance. However, there are future opportunities for the players in the marketplace even with these barriers of adoption. With companies such as Microsoft investing in research and development, secure solutions are bound to emerge that will link the user’s desktop and the user’s mobile handset. Once problems such as this are ironed out, an increase in the numbers of wireless data users will be seen. The strategic move of the players in the market to form an alliance and dedication to Bluetooth assures the creation of demand in the future. Basically, because so many companies have invested large amounts of money in it, it will be forced on the consumer markets regardless of their openness to it. The companies will leverage their products by making any wireless devices without Bluetooth obsolete. The predicted market growth for Bluetooth will draw in large returns for the main players in this market. While profit is in the air, it has yet to be materialized. Effective supply chain management will play a large part in how much profit each company makes. Since Bluetooth is applicable across industries, each company faces different expenses for producing products with Bluetooth capabilities. However, the potential to make money with Bluetooth is tremendous. Industry wide, revenue is predicted to sky-rocket. Yet, much like the dot com phase, revenues will drop off as the usage of Bluetooth evens out amongst the market. The vision of the SIG will be met. Bluetooth’s return of investments yields high promise.

3.7

Market Analysis: Porter's Five Forces Analysis

Another way of looking at the current state of the industry for Bluetooth is within the model of Porter’s Five Forces: industry competition, bargaining power of producers, b argaining power of consumers, threat of new entrants, and substitutes. 1. Industry Competition Currently, firms are trying to overcome the network externality for wireless standards. The more devices that use Bluetooth, the more attractive the standard will be for consumers. There needs to be some degree of cooperation to build a large customer base, which is the main goal of the industry right now. Thus, Industry competition is relatively low. 2. Bargaining Power of Suppliers The suppliers in the industry are mostly makers of commodity goods, like silicon for the computer chips. Because of the abundance of such goods, suppliers do not exercise strong bargaining power. 3. Bargaining Power of Consumers Consumers have other wireless options to choose from, but they don’t have many, especially for the niche purposes that Bluetooth serves. Consumer bargaining power is medium. 4. Threat of New Entrants Due to explosive growth projections, large companies like Microsoft and IBM with extensive resources are spending more on R&D. This prevents smaller companies from competing at the present time. Thus, the threat of new entrants is low. 5. Substitutes While 802.11 is clearly one of the dominant wireless standards and infrared is useful for certain wireless applications, Bluetooth is trending towards certain niche markets they are poised to dominate. The threat of substitutes is medium. Overall, Porter’s analysis indicates that Bluetooth definitely has the possibility to be very successful as a standard in the wireless telecommunications market.

4.

Big future for Bluetooth

4.1

Bluetooth future in mobile phone

Mobile phone users will be a big market for Bluetooth, but many people have already been put off by bad experiences with the technology, according to analysts. Research by Frost & Sullivan, conducted , found that 69 per cent of IT managers had no plans to deploy Bluetooth, and only nine per cent were actually using it. But mobile phones make up the vast majority of Bluetooth applications that companies are considering or using. "Every analyst will tell you that the mobile phone market is the most important for Bluetooth," said Frost and Sullivan analyst Michael Wall. "This is going to increase because legal requirements on drivers are going to see headsets and in-car devices proving very popular. "However, many people remain scarred by bad experiences with previous Bluetooth kit and, in a lot of cases, people are buying Bluetooth but not using it. This may slow wider adoption." The US is still an undeveloped market for Bluetooth hardware, with a third of people surveyed having never heard of the technology. While there has only been a single Bluetooth CDMA phone, more models are expected and the Bluetooth enabled iPaq is proving popular. But there is still very low take-up of the technology overall, in part due to the low availability of products in retail outlets. China is also an undeveloped market, but the country's main telco, China Telecom, is involved in a three-year project to build the next generation of Bluetooth products, although none are close to market at present. "There are still barriers to development, but they are surmountable," said Dr Qiang Gao, general manager of wireless technology developer IVT Corporation. "Some ideas I don't understand- some manufacturers are putting Bluetooth in a fridge which is pretty pointless but it could be useful to save electricity by starting my home's air -conditioning just before I get there." Japan, on the other hand, has adopted Bluetooth wholeheartedly. Sony, Toshiba and other major manufacturers are enthusiastic about the technology for phones and computers, as are consumers. Wireless printing and digital photography are also very popular applications. In-car devices are scheduled for introduction in Japan this August.

4.2

Advantages

Bluetooth will succeed due to several key advantages: cost, size, and power-efficiency. Although the 802.11 standard may have greater range and higher data throughput rates, it can’t compare to the low cost, miniscule size, and extremely low power usage of Bluetooth chipsets. Thus, 802.11 becomes inefficient when considering certain devices (cell phones, computer peripherals, PDAs, etc.). This will be a key advantage that will ensure Bluetooth with widespread success in many different industries

4.3

Bluetooth’s Challenges

There are several challenges that the Bluetooth Consortium will face over the next several years. The biggest and most complicated challenge lies in the widespread use of the 802.11 wireless data transmission protocol. With 802.11b and 802.11g protocols operating on the same frequency as the Bluetooth protocol, interference is a big issue. However, this issue is quickly being resolved through new transmission protocols and algorithms, as well as a wide variety of hardware that calculates and avoids interference with other 2.4 GHz-based devices.

5.0

Conclusion

Bluetooth has opened the doors to a wide range of wireless applications. Although it was slow in arriving to the market and still faces great challenges, it has brought about many new opportunities never before imagined. And while it will continue to face new challenges, it has a clear future in bringing innovative and revolutionary new products to the marketplace.

6.0

References and links for further reading.

http://www.bluetooth.com/ https://www.bluetooth.org/ http://www.worldwide-wireless.info/bluetooth-phones.html http://www.palowireless.com/bluetooth/ http://sysopt.earthweb.com/articles/bluetooth/ http://www.swedetrack.com/images/bluet00.htm http://news.com.com/2100-1040_3-277080.html http://www.blueunplugged.com/ http://informatics.iic.ac.in/issue1/article.php?aid=1 http://www.nokia.com/nokia/0,1522,,00.html?orig=/bluetooth/ http://www.bcentral.co.uk/technology/emerging/bluetooth.asp