Wipro: Baring its bluetooth… - Views on News from Equitymaster

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Wipro: Baring its bluetooth…

Apr 3, 2001

Wipro had set a goal for itself its to become one of the top ten technology companies in the world. It has crossed another milestone in its endeavor to realize this goal. Wipro’s Bluetooth protocol stack, BlueWave, has qualified to confirm to the standards of Bluetooth by the Bluetooth Qualification Body (BQB). And now it will be listed on the BQB’s qualified product list. Conformance to standards incorporates interpretability to the systems, which is very critical for success. Also, it enhances consumer confidence for the products developed in the new technology domain like wireless and embedded systems. The achievement is significant in the sense that increasingly Wipro is creating a portfolio of blocks for the networking and wireless markets for which it holds the Intellectual Property Rights (IPR). These blocks can be directly sold as products to the manufactures of networking and wireless equipments. Thus, Wipro benefits as it slowly gains recognition in terms of creating a brand that is strong enough to create and deploy products in the technology space.

The qualification is an indication of Wipro’s commitment to dominate the technology space. Wipro, for quite sometime now, has been looking to dominate the embedded systems and the wireless space. Bluetooth is a technology that works between both these technology domains. Using the Bluetooth technology, which actually is a standard, electronic devices can communicate with each other and create personal networks. (For more details on Bluetooth please follow the link).

The BlueWave protocol software stack is a modular and highly portable implementation of the Bluetooth baseband software, Link Manager Protocol, Host Controller Interface (HCI) and upper layers. The BlueWave software that is available as a hosted stack as well as an embedded stack, has been validated with third-party Bluetooth hardware. Together, Wipro's BlueBase Baseband Controller and BlueWave stack form a complete Bluetooth solution that can be deployed easily in a broad range of embedded applications, including Bluetooth system designs or IC implementations. Wipro's Bluetooth IPs have already been licensed to multiple customers in the U.S. and Japan.

Cahners In-Stat Group, a Massachusetts-based technology research firm, forecasts that more than 1 billion Bluetooth-enabled devices will be built worldwide by the year 2005. This gives an indication of the tremendous potential the markets hold for Wipro. The advantage for Wipro is that not many software companies from India are into this space. This could be due to the fact that to engineer solutions like these the quality of people required is very high. It is not possible for many companies to attract such quality of people.

Wipro has the first mover advantage, which it is intelligently using to create a brand. Once this brand is well recognized it will be tough for others to dominate the space. Of course what may have lead others to keep off Bluetooth could be the way things went with WAP. Technology is changing so rapidly that many organisations are finding it difficult to keep pace. But this is a part of the game in the new economy. As technology companies work to reduce time to market for their clients, they are faced with the challenge of evolving and rapidly adapting to newer technology themselves. Wipro is playing the game quite well and is all set to dominate the technology space.

At the current market price of Rs 1,228, the stock is trading at a P/E of 50 times its FY01 expected earnings.

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