Titans Swallow WiFi

WSJ writes on how an emerging industry has been taken over by the might of the giants, leaving behind the fledgling start-ups:

Intel’s move into Wi-Fi, and Intersil’s retreat, illustrate how a maturing high-tech industry has changed. For all of Silicon Valley’s mythic start-ups, sudden billionaires and startling innovations, the advantages of size, longevity and brand identification are now often overwhelming. Giants such as Intel, Microsoft Corp. and Cisco Systems Inc. began as upstarts, but today their sheer size means they don’t need to be first anymore. Instead, it’s enough for the titans to be observant and nimble, so they can scoop up new ideas before threats develop.

Technology has settled into a more traditional cycle of innovation that in a general way resembles how Detroit auto makers absorb design advances from California custom-car shops. Rather than the perpetual sense of revolution that permeated the Internet bubble, the elite titans co-opt breakthroughs accomplished by others.

Big players moving into Wi-Fi are quickly achieving economies of scale and reducing the potential for others to make healthy profits. Some giants are using Wi-Fi as a “loss leader”: Intel, for example, sells its Wi-Fi chips to computer makers at — or below — cost. That tactic is designed to boost sales of laptop computers with other Intel chips that are more profitable for the company. A growing number of hotels offer free Wi-Fi in lobbies or rooms. They are converting Wi-Fi into the high-tech equivalent of air conditioning or color TV — just another amenity.


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Rajesh Jain

An Entrepreneur based in Mumbai, India.