April 22, 2004, 11:00 AM — Toshiba Corp. has exited the Wi-Fi hotspot business after just over a year, and will sell most of its network to rival Cometa Networks Inc., the company has announced.
Several hundred wireless LAN installations will be handed over to Cometa in a move Toshiba attempted to sell as a "strategic alliance". Toshiba America Information Systems will continue to make wireless LAN hardware, but its decision to jump out the hotspot market is just the latest implosion in what is beginning to look like a shakeout, say industry observers.
Hardware vendors, mobile and fixed network operators and start-ups are all rushing to roll out large networks of hotspots, but it is not yet clear how many users will even be willing to pay for hotspot use, analysts say.
Toshiba will stop building new hotspots after activating just 350 -- far short of the 10,000 it had originally promised to have online by the end of last year. It is giving individual hotspot locations the option of switching over to Cometa or other service providers if they prefer.
Cometa does not have very ambitious plan either -- it has said it plans to have 800 hotspots running by September, not including the Toshiba network. By contrast, competitor Wayport Inc. last week clinched a deal to install Wi-Fi in 6,000 McDonald Corp.'s restaurants. Toshiba and Cometa had been Wayport's main competitors for the McDonald's contract.
Toshiba tried to put a positive spin on the deal, saying its network -- SurfHere -- had fulfilled its purpose. "Having helped stimulate the emerging hotspot industry, we believe we can best continue with the strategic intent of the SurfHere Network through this alliance with Cometa Networks," said Chris Harrington, vice president for TAIS strategy and business development, in a statement.
The collapse of U.K.-based MyZones, which launched with great fanfare at around the same time as SurfHere, illustrates the difficulty of making Wi-Fi into a paying business, analysts said. "This is part of a consolidation process that is certainly inevitable," said Robin Duke-Woolley, director of technology consultant E-principles.
Users want to be able to use a single Wi-Fi account at whatever hotspot may be nearby, and consolidation is one way of moving in that direction, Duke-Woolley said. Roaming agreements are another. BT Group PLC's Openzone, T-Mobile International AG & Co. KG, AT&T Corp., Sprint Corp. and others have all entered into major roaming agreements. Nevertheless, the Wi-Fi world is still a patchwork of incompatible sites, which can mean a frustrating experience for users, Duke-Woolley noted.