One of the few bright spots this year was the growth of Wi-Fi. But even as the wireless-networking technology drew praise for its potential, it became clear that it still had a lot left to prove.

The year started off with the christening of Wi-Fi as the only standard for the wireless networking market, as rival HomeRF had the final nail hammered into its coffin with the disbanding of the HomeRF Working Group. Gear makers jumped into action, increasing the number and types of handheld computers, consumer electronics gadgets and other products with built-in Wi-Fi capabilities on the market.

The wireless-networking industry was carried by sales to consumers, who were lured to Wi-Fi gear by the higher throughput rates promised by products with 802.11g technology. In the coming year, equipment combining all current Wi-Fi standards--802.11b/g/a--is expected to lift the market.

Consumer sales were so good that networking giant Cisco Systems broke from its traditional strategy of selling gear to large businesses and entered the market for home networking by buying niche leader Linksys. The acquisition placed Cisco on top of the consumer market for wireless networking gear, underscoring its No. 1 position in the enterprise market.

However, corporations were not enthusiastic about adopting Wi-Fi, mainly because security provisions such as Wired Equivalent Privacy were ineffective. The Institute of Electrical and Electronics Engineers (IEEE), the Wi-Fi Alliance and other influential industry groups tried to ease that concern by releasing Wi-Fi Protected Access, a protocol that is expected to appear in the 802.11i security standard when it debuts in 2004.

However, those security measures weren't enough to convince the mass business market. Vertical industries such as government, education, health care and retail remained the ones most likely to install Wi-Fi networks. Enterprise customers are expected to become more receptive to Wi-Fi networks in 2004, with the completion of 802.11i and efforts by developers to .

Intel pumped $300 million into a marketing campaign for its Centrino mobile technology, which combines Wi-Fi parts and a processor for notebooks. The chipmaker looks likely to continue its role as lead cheerleader for Wi-Fi next year.

While gear sales took off, the reception for Wi-Fi hot-spot service--public areas where wireless broadband is available--was cool, causing some pioneers to pull back on their aggressive plans. But carriers and retail partners such as Starbucks, McDonald's and Borders began to lay the groundwork for future hot-spot installations, indicating that they expect consumers to warm to the service.

In the future, the marriage of cellular networks with Wi-Fi networks looks set to get a closer look from major players, and bundling Wi-Fi service with another service will likely become a common strategy.

--Richard Shim