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Using indoor propagation measurements, an investigation of the influence of antenna directivity on the performance of an indoor wireless system is presented. By comparing the path loss data measured from collocated omnidirectional and directional antennas (at different orientations), it is shown that the 'effective' directivity of a directional antenna is heavily dependent on the surrounding environment. Antenna directivity and orientation are shown to influence the level of interference within a system and, therefore, affect overall system performance. Analysis of a simple indoor system with two cochannel base stations showed that the use of directional antennas could either enhance or degrade system performance, relative to a system using omnidirectional antennas. In the best case the use of directional antennas decreased outage probability by 56%, while in the worst case the outage probability increased by 66%.