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Is Wi-Fi Bundling the Answer?

I have read quite a few articles, including one by Bill Gurley, about this theme of revisiting the quiet success of several Internet businesses and business models. Perhaps the secret to helping spur the adoption of consumer Wi-Fi is to go back to the old strategy of “bundling” that AOL and MSN made so popular during the growth of Internet-enabled desktop computers.

There have been lots of articles written about the challenges of Wi-Fi. Without diving too deep into the technical or business challenges facing Wi-Fi’s broad adoption (note: I am the first to admit that the technology has already stuck with technophiles and SMBs), let’s take it on faith that Wi-Fi is not yet “grandma-ready” in terms of ease of deployment and ubiquity. To me, Wi-Fi today looks like Internet access circa 1995 or 1996. Finding a connection (a non-busy dial-up modem access number) was hard, the service was unreliable, and only the most technologically curious had moved to deploy the technology. For any of you who played with early Internet dial-up software, things did not get easy until AOL and other released consumer-friendly dial-up software packages.

I am not a marketing executive for a Wi-Fi company. If I were, here are the three reasons that I would go after Dell, Toshiba, Fujitsu, IBM, or anyone else selling laptop computers to get my software bundled on every new laptop computer rolling off an assembly line today:

Reason #1: All new laptops have 802.11b at a minimum – I don’t know a major manufacturer who isn’t planning to include 802.11b at a minimum in all of its laptop computers in the very near future. Every new PC, business and personal, will come with Wi-Fi support out of the box. That sounds like a sufficiently robust market to meet the sniff test.

Reason #2: Consumers have not yet developed a brand affinity for any Wi-Fi service provider – I don’t know many people who can tell the difference between Wayport, T-Mobile, or Boingo, assuming that they can even identify all of those companies. The opportunity to build brand affinity in the consumer market is huge — this is one of those rare promising “greenfield” opportunities.

Reason #3: Targeting this crowd could be the most cost-effective use of scarce marketing resources – I have to believe that the costs for advertising in airports, hotels, conference centers, billboards, and every other consumer touch point that Wi-Fi service providers are using is an inexpensive proposition. But, without a more cost-effective way to reach potential consumers, what other choice do Wi-Fi service providers have? At CTIA I heard several analyst quote mobile telephone subscriber acquisition costs of $200-$300 per subscriber — those economics would crush Wi-Fi service providers when you add in the fact that you are dealing with an all-you-can eat service with expensive backhaul.

I think that it would be really interesting if you combined this idea of desktop placement with a revenue sharing agreement between the laptop vendor and the service provider. In the end, everyone (including consumers) might be better off.

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