Bluetooth hit by early snags, but market could reach $330 billion by 2006, says analyst

MOUNTAIN VEIW, Calif. -- Despite delays and technical problems, Bluetooth technology still has strong growth potential--at least in the long term, according to a report from Frost & Sullivan here.

The market research firm projects that shipments of Bluetooth-enabled products will jump from 4.2 million units in 2001, to 1.01 billion units by 2006.

Total revenues of Bluetooth-based products will grow from $1.8 billion in 2001, to $330 billion by 2006, according to Frost & Sullivan.

Until now, however, a range of technical and market related issues have slowed down the progress of Bluetooth technology. Issues such as device interoperability, interference from other radio technologies, and fears over the security of the technology have caused delays for developers, according to the report.

Bluetooth is also expected to suffer to some degree from market confusion because there are such a wide range of applications, the report said.

This year, however, there have been some major breakthroughs in Bluetooth technology, including the development of the first true single-chip Bluetooth solution.

"Single-chip solutions have long been the holy grail of the industry and this development will be a major driver behind the falling cost of Bluetooth products," says analyst Michael Wall, who tracks the market for Frost & Sullivan. "The single chip will bring greater silicon efficiency, smaller footprints for easier integration and lower power consumption," Wall said.

While the Bluetooth-based chip business developing into a healthy competitive environment, the end-user devices are not fully functional and do not comply to the 1.1 specification of the technology, the report said.

"Despite these teething problems the technology remains fundamentally an excellent concept, with more and more digital and mobile communications devices entering the everyday lives of the world population," Wall said.