A Wireless Revolution Called Bluetooth

Companies are racing to build products with a new wireless system that could link every machine on earth

Picture a boy climbing on a train from Dusseldorf to Brussels, circa 2002. He switches on his handheld video game, and after a couple of seconds a message pops up on the screen: Someone else nearby is playing the same game, so would he like to join in? By hitting "yes," the boy sends a low-power radio signal that links his machine to the other. It's as if they're connected by a cable. And the two children, who might not even see each other, play as if they're sitting in the same living room.

This is Bluetooth. First conceived in the Swedish laboratories of Ericsson and named for a 10th-century Viking king, it's a short-range radio hookup that resides on a microchip. A consortium of tech companies worldwide--from Intel and IBM to Nokia, Sony, and Microsoft--are racing to build this hookup into their products. When Bluetooth is in place, for instance, you'll be able to zap data from your cell phone to a nearby printer or use your handheld Palm computer to control your DVD player.

Of course, similar radio signals already perform their magic, from buttons on keys that unlock car doors to wireless PC networks in homes and offices. And plenty of machines communicate through infrared signals. But Bluetooth proposes a signal stronger than infrared and more pervasive than wireless office networks. This one goes through walls. What's more, the radio signal carrying one megabyte of data per second--about 20 times the speed of a dial-up modem--can carry voices as well as data.

And Bluetooth proposes a common signal for the entire world. By offering the technology free of royalties, the consortium is hoping to create a standard that will spread to billions of machines worldwide. Cahners In-Stat Group, a Newton (Mass.) research organization, predicts that Bluetooth will make its way into 1.4 billion appliances by 2005. This could generate $5 billion in sales, most of it going to the chipmakers who are already designing computer chips with the new radio systems.

Initially, Bluetooth will simply replace cables. With the first IBM computer cards coming out this fall, for example, travelers will be able to synchronize the data in their laptops and palmtops simply by putting them in the same room.

"A CORE TECHNOLOGY." Only a minor advance. But if Bluetooth takes off, the wireless technology could spread to virtually every appliance, from cars to gas meters. This could give birth to startling new networks in homes and offices. Upon arriving in Tokyo, for example, a forgetful New Yorker with a cell phone could turn off the oven back home and switch on the burglar alarm. "Over the next 12 to 18 months, it will become a core technology for just about everything," says David Shirley, a marketing manager for Hewlett-Packard in France. The implications are vast. Just as the Internet has lassoed together the world's computers, Bluetooth promises to extend that network, by means of its 10-meter radio signal, to nearly every machine on earth.

Yet this new power brings with it new dangers. In a world where machines blab among themselves, personal privacy is at risk. Users must take care to close access to entire home and office networks to keep intruders from their bank accounts and security systems.

This is all assuming that Bluetooth will take off like a rocket. But for that to happen, the industry faces crucial tests. First, it must make sure that microwave ovens, cordless phone signals, and other wireless networks don't interfere with Bluetooth signals. Success could vary from region to region. More important, manufacturers must come up with applications that are easy to set up and operate. If this happens, demand should grow, which will in turn permit chipmakers to produce in quantity, driving down the cost of a Bluetooth chip far down from today's $50. "If the price goes down to $5, you'll have Bluetooth everywhere," says Thierry Laurent, general manager at Philips Semiconductors. Industry experts expect those $5 chips within four years.

MORE MAGIC? The push for Bluetooth comes from Europe. The region raced to world leadership in mobile phones by establishing a unified technology standard. Looking for another dose of the same magic, Sweden's Ericsson three years ago proposed a low-power radio standard to American chip titan Intel. The idea was that everyone's products would fare better in the marketplace if they could communicate wirelessly with each other. Since then, the so-called Bluetooth Consortium has spread to include nearly 2,000 companies, including virtually all of the big ones.

The Europeans, naturally, are banking on Bluetooth to enhance their specialty, the cell phone. Already, nearly half a billion people carry mobile phones. And with Bluetooth, the device could easily morph into an all-purpose remote control. But the Bluetooth push is global. Asia's electronics giants are devising wireless links for a host of consumer devices, from digital cameras to MP3 players. And America's computer industry, led by Microsoft Corp. and Intel Corp., is betting that home networks will grow around the PC. "The key will be next year, when Bluetooth comes out on Windows," predicts Michael W. Foley, software architect in Microsoft's mobile-devices division.

For starters, Bluetooth will replace cables. Early applications will provide links between laptops and cell phones. Travelers who want to Web-surf from a laptop, for example, will be able to transmit through a Bluetooth-equipped cellular phone connection, but without hooking up cables or relying on infrared links. Indeed, they won't even need to remove the phone from their briefcase. Bluetooth should also bypass the cables to PC accessories, from the mouse to the keyboard. "It has the potential to do away with six or seven ports on the back of a notebook," says Ronald Sperano, IBM director for the mobile market. With time, Bluetooth should forge new networks, leaving the cabled universe far behind.

And how will this work? Imagine that a person with a houseful of Bluetooth-powered appliances comes home with a new cell phone. As he switches it into the receiving mode, the phone immediately carries out an inventory of the house. It finds that the TV, the stove, and two computers have Bluetooth. It asks if he wants connections with them. If he answers yes, the appliances link up. By following menus, he can monitor the TV, turn down the oven, and exchange data with the computers, all from his phone. And by calling into the network from a cell phone, he can run the system from anywhere.

Things start getting complicated when someone else carries a cell phone into the house. If the owner of the home network isn't careful to limit access, promiscuous appliances will dally with just about anyone. Naturally, the industry provides loads of protection, including encryption and passwords. But a teenager, for example, might open the system so that a friend can play video games or download music. And if that Bluetooth door is left open, outsiders could barge in.

The new radio system could also convulse the phone industry. When people carrying Bluetooth-powered cell phones enter office buildings, hotels, or airports, their phones may well link up with the wired-phone systems in place. This means that instead of making calls that are billed to their cellular carrier--Vodafone AirTouch PLC, for example, or Sprint--they will simply hitch a ride on the fixed-line network nearby. They could even do this at home, sending cellular calls through a broadband connection. This could create vast islands in the marketplace where the cellular carriers fail to cash in on traffic. Still, free cell calls from the home and office may well lead people to switch for good to mobile phones, which benefits the cellular industry. Says Stefan Krook, CEO of Glocalnet, a Swedish carrier: "The more people use their mobile phones, the quicker the old-fashioned ones will disappear."

PAYDAY. None of this will happen overnight. For now, would-be pioneers have to fork out $100 for PC cards to equip their laptops with Bluetooth. It won't be until next year that the system will come installed as a standard on most PCs and cell phones, with printers, stereos, and televisions following in short order.

That's when the rush begins--assuming Bluetooth is easy to use. And the payoff? It could extend beyond the realm of machines, all the way to human communication. Consider those kids on the train. Once the Bluetooth connection is in place, chances are they'll peek above the seats and hunt each other out. And if their languages are synchronized as smoothly as their machines, they might even talk.