Microsoft is set to release a Windows XP update that adds support for Bluetooth, the much-hyped technology for wirelessly connecting peripherals. The update is included with a new Bluetooth keyboard-mouse combination from Microsoft, scheduled to hit stores by early November. The package, unveiled Tuesday, will cost $159. The company will also offer a separate Bluetooth-enabled optical mouse for $89. The Bluetooth update for XP should be available soon for separate download from Microsoft's Web site as well.

Analysts, though, said the Redmond, Wash.-based computing giant's first Bluetooth implementation ignores one of the most important ways in which the technology can be used. They also said the company is playing catch-up with Apple Computer, which already offers Bluetooth in Mac OS X. Bluetooth lets computers connect to peripherals, handhelds, cell phones and other portable devices without the use of cables. It differs from 802.11b, or "Wi-Fi," which is a wireless technology for linking PCs into a network. Market researcher IDC expects Bluetooth adoption to take off in 2003, with the market for Bluetooth components, such as chips and memory, reaching $2.6 billion in 2006. The market hit $76.6 million last year.