Mesh Radio Herd Plagued by Locusts

[David Farber <dave () farber net>]

Begin forwarded message:

From: Dewayne Hendricks <dewayne () warpspeed com>
Date: July 23, 2004 11:50:07 PM PDT
To: Dewayne-Net Technology List <dewayne-net () warpspeed com>
Subject: [Dewayne-Net] Mesh Radio Herd Plagued by Locusts
Reply-To: dewayne () warpspeed com

The Industry Standard: Guest Blog: Scott Rafer


Mesh Radio Herd Plagued by Locusts
<http://www.thestandard.com/movabletype/scottrafer/archives/000402.php>

I have only raised money for software businesses, so I am very used to 
being asked about open- source projects as potential competition. VCs 
must not ask hardware systems entrepreneurs that question as often. If 
they did, they would have passed on a every mesh radio systems business 
(and probably a few enterprise VOIP businesses).

From a proprietary systems perspective, the mesh radio business was 
over before it began. Not only is Intel hedging its bets on Wi-Max in 
cooperation with Cisco, but also an inexpensive open-sourced product 
from LocustWorld already leads the field. I'd estimate that Locustworld 
leads all other mesh radio vendors in both revenue and installed units 
by at least one order of magnitude. The company appears to get paid for 
their work in all cases, which the other vendors can not currently 
claim.

There are arguments left and right about how well mesh radio and 
LocustWorld scale in densely populated areas, but I don't see how these 
arguments are relevant. In 24 months, when mesh radios are sold in 
BestBuy for a few hundred bucks, another Moore's Law doubling will be 
under our collective belts and lots of signal collision software will 
have been greatly refined. How many $10,000 truck rolls can happen in 
that period of time?

There are silver linings here, however. The economics of mass 
deployment will force the primary radio chips and CPUs be sourced from 
mainstream vendors, but some of the other subsystems businesses may be 
very lucrative. Following the example set by the Wi-Fi laptop business, 
radio chips lose money, but smart antenna technologies and innovative 
power management schemes can be protected and margins preserved. If you 
dissect one of Dell or Toshiba's Wi-Fi access points, you find a large 
component overlap with their cheaper laptops. Also, Cisco may soon have 
a large enough installed base of Linksys wireless access points to open 
up the platform to developers. Will adding software to cheap Linksys 
Wi-Fi radios let VC-backed mesh systems vendors generate enough revenue 
to please their investors?


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