Chipping away at the Bluetooth myth

For Bluetooth to become widely used, companies that make chips for the technology must reduce the cost of their products to a level that's reasonable for makers of mass market electronics products. At the same time, until those gadget makers start to order Bluetooth chips in high volume, prices will remain high. The catch-22 situation could keep Bluetooth on the back burner until 2003 or even 2004, according to some analysts.

"At its current cost, Bluetooth is not going to work its way into the mass markets," said Ben Thompson, senior analyst at Gartner Group, reflecting the view of several analysts and industry executives interviewed for this story.

The ideal price point for the set of components needed to bring Bluetooth capabilities to a product -- typically a processor, radio transmitter, antenna and flash memory -- is around $US5, Thompson and other analysts said. Most Bluetooth chip sets on the market today start at $US10 to $US15 -- a substantial difference for device makers that produce low-margin goods in high volumes.

For users, the stakes are high. The wireless technology promises to free them from the tangled web of cables used to connect devices at home and at work. A PC with Bluetooth, for example, could send print jobs to a printer across the room over the airwaves. Perhaps more exciting, Bluetooth could be used to connect mobile phones to laptops and handheld computers, turning phones into convenient wireless modems. In a more futuristic scenario, a Bluetooth shoe might connect to a jogger's watch, providing information about the runner's speed and distance traveled.

Those benefits won't become widespread any time soon if the price for specialised chips used in Bluetooth gadgets doesn't come down. Some analysts said this fact has been overlooked by companies seeking to promote Bluetooth as the next big thing.

"Bluetooth is one of the most over-hyped technologies of the century," said Phillip Redman, research analyst at Gartner, who agreed that prices must be slashed for Bluetooth to be successful.

Leading chip makers at CeBIT said they each expect to ship, on average, only about 250,000 Bluetooth chips to customers this year. Philips Semiconductors sells a device to Ericsson for use in mobile phones and headsets, and claimed it shipped 1 million Bluetooth chips last year, according to Philips spokeswoman Alexandra van Werkhoven. Gartner's Thompson was skeptical of that figure, saying it exceeds his expectations for most companies.

Chip makers are taking different approaches to designing affordable silicon for Bluetooth products. Since Bluetooth requires both radio transmission technology and a processor for computation, vendors including Ericsson and Toshiba are designing products that make use of two separate chips. This would allow phone makers, for example, to use only the Bluetooth transmission chip and rely on the mobile phone's existing processor for the computing capabilities, helping to reduce costs.

That approach could be beneficial in the short term, but in the longer term designing more integrated Bluetooth chips will be more affordable and better suited to a wider range of products, analysts said. To boot, most vendors are planning a single-chip solution that combines the radio transmitter, memory functions, and other components on a single piece of silicon, which they say will be more flexible and affordable.

One such company is Cambridge Silicon Radio (CSR), based in Cambridge, England, which hopes to bring the Bluetooth myth closer to reality. The wireless chip maker has garnered investments from Compaq, Intel, Sony and chip maker ARM.

"The single chip promises to offer lower costs," Gartner's Redman said, adding that CSR stands a good chance of reaching the $US5 mark before its competitors because it is designing a smaller, more flexible product. Ericsson's Bluetooth module, for example, is larger than a book of matches, while CSR will make a single-chip product less than a centimetre across.

Samsung Electronics, Motorola, National Semiconductor, Qualcomm and Texas Instruments are also developing single-chip Bluetooth products, but analysts said those products aren't as integrated or as far along as CSR's product.

Indeed, CSR has already developed a chip that's being used in a Bluetooth module offered by Alps Electric. Sony uses the Alps product in some of its higher-end Vaio notebooks, making it one of the first Bluetooth products available in a consumer device. Unlike most early implementations of Bluetooth, the module is included inside the notebook rather than being offered as a PC card or other kind of add-on product.

CSR hopes to start selling a more advanced Bluetooth chip later this year that will integrate all of the components needed to Bluetooth-enable a device. It said the chip has the potential to be sold at the $US5 mark -- but only when it can secure orders for tens of millions of chips, which it doesn't expect to happen until 2003, said Matthew Phillips, CSR vice president of strategic marketing.

Like many chip start-ups, CSR won't manufacture its own products. Instead, the company will enlist the world's largest contract manufacturer, Taiwan Semiconductor Manufacturing, giving it access to the latest chip-making techniques.

Gartner Group estimates that Bluetooth chip prices average between $US8 and $US9 this year, although its estimate doesn't include add-on components needed to fully enable a Bluetooth product. The company expects to see a fully integrated product that could be sold for $US5 a year from now, but only if the volume of orders is sufficient. Bluetooth chip makers could generate about $US293 million in revenues during 2001, the company estimates.

Mobile phones will likely be the biggest driver for the early adoption of Bluetooth, thanks largely to their widespread use and ability to double as wireless modems, Gartner's Thompson said. If the market for Bluetooth chips in mobile phones takes off, chip makers may receive sufficient orders to drive prices down.

While catch-22s typically continue ad infinitum, consumers can do their part to help put an end to the Bluetooth conundrum. If companies see enough user interest in a world without wires, Bluetooth could be widely available in cell phones, printers, laptops and even shoes by 2003 or 2004.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Ashlee Vance

PC World
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?