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Wireless LAN chips will plummet in price and show up in almost all notebook PCs by 2007, say researchers at IDC in a new study.

"We think it's going to be integrated into most notebooks at that point, at a minimum extra charge, if any," says Ken Furer, IDC analyst. The market research company estimates that most notebooks will have Wireless LAN chips (WLAN) built in by 2005. By 2007, 98 percent will come with the capability, the researchers say.

Furer predicts 91 percent of those systems will be equipped with 802.11a/b/g chip sets, which allow users to log on to LANs that use 54 megabit-per-second 802.11a and 802.11g technologies, as well those that use 11Mbps 802.11b. This year, about 42 percent of notebooks will ship with wireless LAN included, IDC says.

Prices To Drop

Inclusion of WLAN chipsets in notebooks will be the leading driver in growth, and will help push WLAN semiconductor shipments from 23.5 million units last year to 114 million units in 2007, Furer says. However, lower prices will stem chip revenue growth while benefiting end users, he adds. Revenue from wireless LAN chipsets will increase from $599 million last year to $1.1 billion by 2007.

As chip prices fall, the premium pricing will all but disappear for the faster 54mbps WLAN gear or dual-band hardware, capable of operating in the 2.4GHz band used by 802.11b/g and the 5GHz band used by 802.11a, Furer adds. By 2007, IDC expects 802.11b chipsets should be priced at $5.90. 802.11g will cost about $6.80, and dual-band 802.11a/b/g at $7.40. This year, the average prices of those chips will range from $10 for 802.11b to $24 for dual-band, he notes.

Revenue probably will keep growing until 2005, followed by a decline as chipsets become more highly integrated, huge volumes of chips flow into the market, and the industry consolidates, IDC predicts. Many chip companies specializing in WLAN are likely to be acquired by larger vendors over the next few years, Furer says. Intel, which currently turns to other vendors for most WLAN elements of its Centrino notebook chip set, may acquire chip vendors to take more of those capabilities in-house, he adds.

Phones Will Wait

Even as most notebook PCs are equipped with WLAN, the technology will still be found in few mobile phones because of cost, space and power consumption issues, IDC adds.

Even in converged devices with phone and personal digital assistant capabilities, penetration will be about 5 percent in 2007, Furer predicts. In addition, relatively few desktop PCs are expected to come equipped with WLAN. Rather, users are more likely to rely on add-on gear such as clients attached via USB.

However, wireless connectivity using desktop systems may have its place. IBM recently equipped some Boys and Girls Clubs with wireless Internet access for their desktop PCs.

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