Wi-Fi Becomes a Commodity

Its official—Wi-Fi has reached commodity status.

On Tuesday, Conexant Systems Inc. preannounced lower earnings for the current quarter, based on an influx of low-cost Wi-Fi chips produced by Taiwan manufacturers. Conexant executives said that the price of 802.11g components is now on the order of 802.11b chips in certain markets.

Although the Wi-Fi market has been continually remade as new 802.11 standards have been finalized, a sense of stability has emerged now that the 802.11g standard has been finalized and products have entered the market. The most recent addition, 802.11i, will update the security protocols used inside the 802.11 specification beginning this September, when the first products are certified for compatibility.

In the December time frame a number of Taiwan-based competitors began fabricating extremely low-priced 802.11g chips, which they then marketed to the OEMs that design the routers and switches shipped as products from companies like D-Link or Linksys, according to Conexant chief executive Armando Geday, who hosted a conference call with analysts on Tuesday.

“These additional competitors exacerbated pricing pressure in a market already characterized by severe price competition,” Geday said in a statement, which he read during the call. “Also, channel inventory of our customers products increased as new competitors products, based on low-priced Taiwanese solutions, caused our customers to lose market share.”

To read the full article,

click here.