Microsoft Corp. (Nasdaq: MSFT) is planning to enter the wireless LAN (WLAN) networking hardware market this fall, sources familiar with the company's plans tell Unstrung.The software giant will bring out WLAN gateway products aimed at the home networking market -- bringing them directly into competition with such major players in this space as Intel Corp. (Nasdaq: INTC), Linksys Group Inc. and Cisco Systems Inc. (Nasdaq: CSCO).Sadly, Intel didn't feel it could talk about this 300-pound gorilla barreling into its comfortable home networking niche. "We haven't seen the release," Tom Potts, a spokesperson for the chipmaker told Unstrung. "We can't comment." [Translation: Go. Away.]

However, this move is clearly a huge vote of confidence from the software giant for the nascent wireless home networking market. It's arguably as important as "what Apple did two years ago with Airport [the first wireless home networking hub]," says an industry observer, who asked to remain nameless.

"There's not been a true brand player [in the home networking market] yet," says Dominic Arnscough, analyst for the consumer technology and services practice at the Yankee Group. He notes that with 802.11b wireless support in its XP desktop operating system, the X-Box game console, and projects like the "Mira" flat-panel TV/PC remote control, Microsoft is well placed to bridge that gap.

Indeed, Arnscough says that as the market matures, Microsoft could well find consumer electronics giant Sony Corp. as its major rival. Sony, he notes, has been working on its own projects to make the Playstation 2 into more of a broadband entertainment and connectivity hub.

Wireless home networking isn't a huge market today, but many analysts expect it to get much bigger. In-Stat/MDR has just done a survey of wireless LAN home networking users. Michael Wolf [ed. note: arrrooooooo!!], director of enterprise and residential services at In-stat, says only 11% of those surveyed are using wireless LAN today. Of those, "over 95% of them are using 802.11b. I was surprised how little were using Home RF, but very little in this survey were," he says.

Wolf expects the wireless home networking market to grow "very quickly." He expects that sharing broadband connectivity, multiplayer gaming, and video streaming will be among the main drivers.

"New devices, such as Webpads, from companies like Microsoft will help drive market, as easier to use, non-PC devices proliferate," Wolf says.

With its "Soft WiFi" project (see WLAN = Windows Wireless Networking?), support for wireless in operating systems and many mobile device projects, the move into 802.11b hardware is proof of how badly Microsoft wants to own this market.

In other words, "It's a scary embrace-and-extend play. Run screaming!" as Arthur Tyde III, CTO of open source WLAN mavens Sputnik Inc. so memorably put it to us back in April.

Microsoft itself didn't feel able to comment on this story. Apparently all its spokespeople are only now returning from an extended July 4 blowout.

— Dan Jones, Senior Editor, Unstrung
http://www.unstrung.com