Ericsson has announced that it was pulling out of developing Bluetooth solutions for the semiconductor industry. While Ericsson claims Bluetooth will march on, some analysts said the short-range wireless technology may have had its day.
Since Ericsson, the Stockholm, Sweden-based mobile phone and telecommunications company, invented Bluetooth, it has been producing intellectual property blocks for semiconductor manufacturers like Intel Corp., allowing them to make Bluetooth chips.
Johan Akesson, Ericsson's vice president of marketing, said the company has faith in Bluetooth as a technology, but because of declining profit margins on Bluetooth chips, Ericsson can no longer make a business case for its activity.
"We have raised this baby and now we need to let this baby walk on its own," he said.
And while Bluetooth deployments have been doubling annually and according to the Bluetooth Special Interest Group last year 1 million Bluetooth units were shipped a week, some analysts said Bluetooth may be on its way out, and that Ericsson's departure is particularly troubling since the company invented the technology.
Akesson said that Bluetooth has a certain momentum because there are so many devices on the market with Bluetoth embedded in them. But Craig Mathias, a principal with the Framingham, Mass.-based research firm Farpoint Group, argued that the number of Bluetooth-enabled devices is irrelevant if no one is using Bluetooth. Mathias compares Bluetooth to infrared, a technology that was once widely available in laptops and cell phones, but is largely being left behind in the age of Wi-Fi.
Bluetooth's protocol stack -- the mechanism for moving data over wireless networks -- is likely to survive and can be used with any wireless technology, Mathias said, but Bluetooth as radio technology may be doomed.
"The radio portion of Bluetooth will disappear," he said, meaning over time that no one will be communicating using Bluetooth.
Part of the problem is that Bluetooth transfers data at about 1 Mbps, much too slow for the increasing heavy use of wireless, Mathias said.
Stan Schatt, a research director with Cambridge, Mass.-based Forrester Research Inc., said Bluetooth faces stiff competition from Wi-Fi and even emerging ultra wideband technologies. He said Motorola, as an example, is adding Wi-Fi -- not Bluetooth -- to its 3G phones.
Bluetooth is likely to survive in consumer electronics, Schatt said, perhaps as means of interconnecting elements of home stereo systems.
Akesson disputes that assessment, saying that Bluetooth has a bright future even in the enterprise and will be valuable as means of enabling communication between wireless devices and earphones, PDAs, laptops and other devices.
Whether or not Ericsson's retreat from the Bluetooth chip market denotes a turning point in the technology's prospects, Schatt said business can't hide from Bluetooth. It is increasingly showing up in devices and even if people are not using it, the wireless capability is there and can present a security risk.
Schatt recommends that businesses incorporate Bluetooth into their overall wireless policies.
"You can't ignore the little devices coming through the side door," Schatt said. "They have an impact on overall security."