Champagne wishes and wireless dreams

Catered parties, top-name entertainment, loft-style offices in old warehouses, venture capitalists always underfoot: Which dot-com am I talking about?

None of them. This is the wireless business -- today. Companies with new ways to let you communicate without cables are starting up, not shutting down. Some of them are doing it in a style that's vaguely familiar.

Take Trapeze Networks, for example. The wireless startup, based in Pleasanton, California, not far from Silicon Valley, last month treated a few dozen IT journalists and industry analysts to a Cirque du Soleil show and adjoining tent party in San Jose, California. The invitations arrived in a whimsical little wooden box that also contained a stylish chrome Trapeze keychain. The party in a private tent next to the big top was no budget affair either, with an ample supply of wine and other drinks as well as fine hors d'oeuvres and desserts. Circus performers put on little shows as the guests warmed up for the main event.

Trapeze hasn't said much about what it's going to sell, apart from being in enterprise wireless LANs, but it's probably safe to say it'll be something actual people want. (And can identify, which was not always a given in the dot-com era.) Consumers and corporations are voting with their pocketbooks to cut their umbilical cords to the phone network, the office LAN and the home broadband connection.

The show's theme seemed tailor-made for Trapeze's marketing purposes and summed up the appeal of wireless. The title, "Varekai," means "wherever" in the Romany language, according to the official show program. The key is being able to go where you want to go while you communicate and use the Web and other applications. There are more ways to do that all the time, including GPRS (General Packet Radio Service), faster WCDMA (Wideband Code-Division Multiple Access), a slew of other fast cellular systems based on CDMA, and wireless LANs.

Service providers haven't shied away from the limelight either. Wireless provider T-Mobile USA Inc. took over historic Alcatraz Island in the San Francisco Bay last October for an outdoor rock extravaganza celebrating the rollout of its new brand. About 500 regular folks chosen through radio competitions and T-Mobile promotions joined reporters and analysts who were ferried out the former prison site to watch performances by Creed and the Wallflowers, headed up by Bob Dylan's son Jakob.

It was dark and cold and the San Francisco fog felt like rain at one point, but free booze and finger food kept the crowd in high spirits throughout the evening. The event was part sponsored by VH-1, which televised the concert, the first of its kind to be held on Alcatraz, according to T-Mobile.

The event paid off for T-Mobile, according to spokesman Brian Zidar, who said the carrier added about 1 million new subscribers in the fourth quarter of last year.

The overall gloom in the tech industry here in Northern California, where software developers now stand next to freeway entrances and hand out resumes, may be helping the wireless upstarts make a name for themselves.

"When you're the only light in the darkness, you'll shine brighter, and if you turn up the wattage a little you'll just shine that much brighter," said George Prodan, senior vice president of worldwide marketing at Trapeze.

The glow cast by Trapeze and other wireless startups draws a breed that hasn't been heard from so much in the past couple of years: the Silicon Valley venture capitalists.

Trapeze, which was launched last March, pulled down about US$16 million in its first round of financing in April, some of it provided by the company's founders. Accel Partners was the biggest investor, according to Peter Wagner, a board member at the Palo Alto, California, firm.

"It's nice to see a market that's really growing and especially one that can make a lot of difference," Wagner said.

The dark dot-com days of 2001 actually were the heyday of venture investment in wireless, according to the PricewaterhouseCoopers/Venture Economics/National Venture Capital Association MoneyTree Survey. That year venture capitalists closed 206 wireless-related deals totalling just over $2 billion, said Steve Bengston, managing director of emerging company services at PricewaterhouseCoopers LLC, in Menlo Park, California. However, in 2002 they put another $1 billion into wireless, in 131 deals, he said. And today we may be seeing some of those earlier investments come to fruition in the form of companies now going public with their plans.

Will this party end the way the last one did? Bengston thinks it may.

"Clearly, there will be a few firms emerging that will be big winners .... but a big chunk of them are going to go under," he said. There are three main dangers, he explained. They may be selling something no one really wants, or face too much competition, or fall victim to cautious spending by potential customers. "We are in the middle of a recession," Bengston pointed out.

It sure didn't feel like one a few months ago at an open house for Vivato Inc., a startup that says its technology can extend the range of standard IEEE 802.11 wireless LANs from a few hundred feet to seven kilometers (4.3 miles). In the company's offices in the formerly booming South of Market section of San Francisco, waiters carrying grilled shrimp and prosciutto-wrapped asparagus spears wafted past fancy swivel chairs and a well-stocked bar. Even the decor had that certain style, with exposed beams and ventilation pipes.

Where did all that come from? The former tenant, someone said: An old dot-com.

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