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The two technologies, IEEE 802.11b and Bluetooth, have been growing rapidly for the past few years. Since both systems operate the same 2.4 GHz frequency band, it is anticipated some interference between these two systems. In this paper, the performance of IEEE 802.11b network is evaluated in the presence of Bluetooth piconets using probabilistic approach. The analysis is described at both physical and medium access control layers. All possibilities of time offset between IEEE 802.11b packets and Bluetooth packets are considered. Packet error rate (PER) and the throughput of an IEEE 802.11b network are obtained.