(Business 2.0) – Wi-Fi is already huge--and it's only going to get bigger. Wireless hotspots are sprouting up in airports, hotels, and cafes, while many new laptops come straight from the factory with Wi-Fi capability built in. There's still plenty of room to grow: Roughly 25 percent of American homes have multiple computers, and no one wants to lay Ethernet cable to connect them.

That's where Linksys of Irvine, Calif., comes in. Its innovative, affordable Wi-Fi routers and hubs have become the gear of choice for wireless home improvers. By the beginning of 2002, Linksys had beaten out Hewlett-Packard and 3Com to become the sector's leading manufacturer.

Whenever a computer-related business gets big, though, it runs the risk of waking the giant in Redmond. And true to form, Microsoft sat up last fall to introduce its own line of wireless base stations and USB adapters. With sales of $440 million, little Linksys is now facing the fight of its life.

The company is ready for battle. After all, this is a firm that takes home networking personally. Victor and Janie Tsao started Linksys in their garage in 1988; the husband-and-wife team nurtured the privately held company by studying what customers want networking technology to do--and then quickly rolling out products to meet those needs. Today, Victor is president and CEO while his wife is VP for business development, coordinating Linksys's sales and marketing staff. Their strategy? Move so fast that lumbering Redmond won't be able to keep up.

In the four months since Microsoft joined the battle, Linksys has cut prices on basic items like wireless routers while also launching clever (and cheeky) new products, such as a wireless Ethernet bridge that links Microsoft's Xbox consoles to PCs. Quips Linksys sales chief Glen McLaughlin: "We launch a new product a week. By the time our competitors realize what's going on, we're already working on the next one."

It's too soon to tell whether this rapid-fire approach will be enough to fend off Goliath. But the picture should become clearer as December's sales numbers roll in. That's the real measure of whom consumers wanted to bring home for the holidays. --MATTHEW MAIER