Wireless LAN chips will plummet in price and show up in almost all notebook PCs by 2007, according to a recent study by IDC.

"We think it's going to be integrated into most notebooks at that point, at a minimum extra charge, if any," said IDC analyst Ken Furer.

The research firm estimates that most notebooks will have WLAN built in by 2005, and by 2007, 98% will come with it. Furer predicted 91% of those systems will be equipped with 802.11a/b/g chipsets, which allow users to log on to LANs that use 54M bit/sec 802.11a and 802.11g technologies as well those that use 11M bit/sec 802.11b. This year, about 42% of notebooks will ship with WLAN included.

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

As chip prices fall, the premium for faster 54M bit/sec 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, will all but disappear, Furer added. By 2007, 802.11b chipsets should be priced at $5.90, 802.11g at $6.80 and dual-band 802.11a/b/g at $7.40, he said. This year, average prices of those chips will range from $10 for 802.11b to $24 for dual-band.

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 predicted. Many chip companies specializing in WLAN are likely to be acquired by larger vendors over the next few years, Furer said. Intel, which currently turns to other vendors for most WLAN elements of its Centrino notebook chipset, may acquire chip vendors to take more of those capabilities in-house, he added.

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. Even in converged devices with phone and PDA capabilities, penetration will be about 5% in 2007, Furer predicted. In addition, relatively few desktop PCs will come with WLAN, with users relying on add-on gear such as clients attached via USB.