WE AT NOKIA VENTURE PARTNERS BELIEVE THAT THIS is a ripe time for investing and are doing so at a consistent pace having already made several investments this year. We believe that even though from a macro perspective, there is stagnant growth in most technology sectors, being in a downturn when competitors are having cash flow issues while the markets still demand better, faster, cheaper products creates opportunities for start-ups that are well financed, with a strong management team and differentiated technologies. One of the sectors we see opportunities in is the enterprise wireless space.

In the enterprise wireless space we see investment in both the application and infrastructure sides. The growth of enterprise wireless will be driven by innovative new applications and that in turn will require next generation hardware and software infrastructure to deliver those applications.

On the application side mobility offers the enterprise some unique benefits. In these economic times when enterprises are downsizing and watching their costs, enterprises are looking for products with a clear short term ROI. Therefore applications that help in reducing capital and operational expenditures are in demand today. But VC’s cannot invest in the markets of today since it could take a company anywhere from 18 to 24 months to get to market. VC’s have to anticipate the markets of tomorrow. We believe that in that timeframe enterprises will have trimmed most of their fat and will start investing in revenue and productivity enhancing technologies. Therefore on the application side mobility offers unique investment opportunities in such areas as Location Based Services, Mobile Commerce, Remote Facility Monitoring, Unified Messaging, Push to Talk, Enterprise applications (Sales Force Automation, Supply Chain Management, etc), real time multimedia, Multiparty Collaboration etc.

All of these applications will require robust infrastructure. The enterprise could leverage several types of infrastructure technologies to enable their applications. Some of the existing and emerging technologies include Cellular (2.5G, 3G), Wireless LAN (802.11x), Bluetooth, Ultrawideband, and Fixed Wireless etc.

WLAN seems to offer the most promise of any of the different access layer technology for enterprise mobility solutions. Here are six reasons why:
• WLAN is fast, compared to other wireless radio access technologies broadly available today.
• It is available in a variety of form factors, the most prevalent being laptops today. In this respect, WLAN is usually just an up sell for current laptop users, not requiring the purchase of new computing devices.
• It offers a relatively painless user experience, though, no doubt, it could be better.
• It is comparatively cheap to use, compared to other data rate pricing for other wireless radio access technologies. And access point and access card equipment prices are only going to drop even faster as WLAN becomes more popular.
• It is becoming more available in many of the locations where you are likely to want to do mobile computing (home, work, travel).
•There is almost no “user adoption” risk. People understand the value of using their laptop to access web-based content and applications in a portable fashion.

We have seen several waves of Wireless LAN investments. The first real wave of WLAN start-up deals came through in mid-2001 and addressed the issue of inadequate 802.11 coverage by offering “Wireless ISP Inter-connection”. The second wave of WLAN start-ups we saw in late 2001 and addressed the issue of inadequate 802.11 coverage through “Enhancing WLAN.” The third wave came through in the first quarter of 2002. We call it the “BAG Chipset” wave.

Close to thirty different start-ups offered flavors of multi-standard WLAN RF chipset solutions. A fourth wave came at the end of the first quarter and throughout the second quarter of 2002. This wave we call the “Enterprise Management” wave. In this area we saw at least a dozen start-ups promising to offer a better enterprise WLAN experience. Yet a fifth wave came through in the second quarter and earlier part of the third quarter of 2002. This was the “WLAN/WAN Roaming” wave. A sixth wave that started in the fourth quarter of 2002 and appears to be fading now is what we have named the “Voice+Video over WLAN” wave.

We believe that this is the tip of the iceberg and that there are still significant opportunities for entrepreneurs to create products for the wireless LAN space. It is a space that is growing fast. Large enterprises will need to be able to deploy large-scale networks that are secure, easy to manage and deploy and be able to provide applications on top of that infrastructure. There are several emerging architectures in this space and the winner has not been declared yet. Small to mid size enterprises will also benefit from wireless LAN deployments. Their requirements are different from the larger enterprises in that they do not have to have large-scale deployments. They need infrastructure that will allow them to cost effectively, securely and easily deploy WLAN solutions.

The Cellular Networks are evolving to higher data rates with the deployment of 2.5 G and eventually 3G networks. Enterprises can look forward to high bandwidth wireless connections to their desktop that are managed by a service provider and thus allow an outsourcing opportunity to reduce cost. An interesting area of investment is the convergence of the cellular and WLAN networks. This is a significant challenge and required new technologies all the way from the service provider's central office to the terminal or handset. The building blocks for enterprise applications to take off include:
• Networks with adequate coverage, data rates and security.
• User-friendly devices (JAVA and color screens, improving power consumption, SMS interconnects and MMS).
• Easy and rapid way to deploy and maintain applications.
• Easy ROI calculations.

Technologies such as Bluetooth and Ultrawideband offer interesting opportunities due to their inherently lower cost structures and ability to deliver high data rates. The applications for these technologies are numerous and ripe for entrepreneurs to take advantage of.

In conclusion, we believe, the enterprise wireless space has a bright outlook. There are already clear signs of the space growing rapidly. Therefore, the demand is there. Yet a lot of challenges need to be solved throughout the value chain, from applications to systems to components and semiconductors. The innovative entrepreneurs will discover these opportunities and VC’s will fund these ideas.