Airespace
By Stephanie N. Mehta

(FORTUNE Magazine) – At a meeting with his board of directors this summer, Airespace CEO Brett Galloway told those gathered that just three months into selling its products, the company wouldn't make its projected sales for the year. Instead, he said, it would pull in more than double the revenue he'd originally forecast.

That's not exactly a common scenario at new tech companies, especially ones focused on the battered telecommunications sector. But Airespace happens to be trained on telecom's lone bright spot: wireless local access networks, also known as Wi-Fi. The San Jose firm makes switches and other gear for corporations looking to give their employees fast, wireless access to the Internet. Airespace, which won't disclose revenue, says it has dozens of corporate customers, including mutual-fund giant (and Airespace investor) Fidelity Investments and software maker Documentum.

Even the most cost-conscious IT departments are starting to loosen their purse strings for wireless Internet services. A recent survey by Goldman Sachs found that nearly half of corporate IT departments plan to deploy Wi-Fi laptops in the next year, prodded in no small part by employees who already enjoy untethered Internet access in their homes and neighborhood coffee joints.

Corporations, of course, have more sophisticated needs than consumers, and Airespace is winning customers largely because its products meet those needs flexibly and simply. Customers say the Airespace system meshes nicely with their wired networks; they don't have to upgrade their switches, for example. And adding new wireless users is fairly straightforward. With some earlier generations of Wi-Fi systems, companies had to hire consultants to figure out where to install "hot spots," or radios for transmitting and receiving data, and other equipment. The Airespace system automatically lets IT departments know where to add capacity, and allows tech folks simply to plug in additional gear. "Our systems are like radio-frequency engineers in a box," Galloway says. "Our customers don't have to become wireless experts." Airespace gear can also detect rogue hot spots that employees sometimes install in their zeal to spread Wi-Fi in the workplace.

Larry Jarvis, a Fidelity vice president who is rolling out Wi-Fi to more than 1,000 employees, is expanding his deployment of Airespace gear. Right now he's hooking up the employees' PCs, but later he plans to connect other devices to Fidelity's Wi-Fi net, such as personal digital assistants--an expansion Airespace's products support, he says.

For IT folks, who still face pressure to keep spending down, perhaps the greatest appeal of the Airespace system is its cost: The company says it can unwire a company for about $125 to $150 per user (excluding the cost of Wi-Fi cards for users' laptops). That's not cheap, but it's much less than dragging Ethernet cable through a large office. Some companies are starting to think the price is fine for delivering the technology that workers really want--and to do it before some rogue employee does. --Stephanie N. Mehta

WHAT'S GIVING AIRESPACE LIFT

--Wi-Fi (it's hot). Almost half of corporations will invest in wireless local area networks in the coming year, and Airespace's suite of wireless switches and hot spots is poised to meet the demand.

--Flexible systems. Customers say Airespace products plug simply into earlier versions of Wi-Fi systems and wired networks alike.