Report Eyes Convergence Glitch

Startups Airespace Inc. and Kineto Wireless Inc. announced today that they had successfully tested seamless transfers between Airespace's switched wireless LAN system and a GSM network, using Kineto's cellular network and phone software.

Kineto says that transfers between Airespace's access points and its inhouse mini-GSM network took a mere 40 to 80 milliseconds.

But despite such technological steps in the right direction, the scarcity of inexpensive dualmode wireless LAN and cellular handsets could prove to be a bottleneck to those dreaming of WiFi-cellular convergence.

Steve Shaw, director of marketing at Kineto, lays it out: "The big problem that we have is still the availability of handsets."

Kineto, which makes software that facilitates handoffs between wireless LAN and cellular networks, has been relatively successful -- as a mere startup -- in getting handset vendors and chipmakers to adopt its software.

The firm has a deal with handset maker BenQ Corp. and chipmaker Philips Semiconductors (NYSE: PHG).

"They're a major supplier to Samsung," Shaw notes.

The latest edition of Unstrung Insider, expands on the crucial role of handsets in the convergence conundrum.

"More than any other factor, the availability of handsets that contain cellular (2G and 3G) radios, local area radios (802.11), and personal area radios (Bluetooth and UWB) is crucial to convergence," writes chief analyst Gabriel Brown in the report, "Converge This! WLAN-3G Mobility."

"Without such devices, convergence can happen at the billing level, at the core network level, or at the application level, but from the user perspective a dual- or tri-mode device is often seen as the most attractive way of benefiting from convergence."

Early convergence mobiles from the likes of NEC Corp. (Nasdaq: NIPNY; Tokyo: 6701) and Nokia Corp. (NYSE: NOK) tend to be larger, and -- as you might expect -- more costly than standard cellphones.

And although a number of dualmode devices are expected to ship this year, converged phones are still some way off from the mainstream.

"Based on our interviews with 802.11 chipset vendors and handset manufacturers, somewhere between 8 and 10 percent of mobile phones could ship with integrated WLAN by 2008 – although several vendors say this is optimistic," writes Brown.

— Dan Jones, Site Editor, Unstrung

The report is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,350. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.

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