Wi-Fi Hardware Sales Climb

By Ed Sutherland

November 23, 2004

Infonetics reports on the always growing WLAN equipment market, saying there was a 9 percent growth from second to third quarter, with sales reaching $795 million.

As the year begins to wind down, new figures show a nine percent jump in Wi-Fi hardware sales between the second quarter and third quarter of 2004. Worldwide WLAN hardware revenue reached more than $785 million. Drawing on a strong demand for mobile data, shipment of WLAN hardware jumped 31 percent over the same time, according to London-based Infonetics Research.

By 2007, Infonetics predicts, Wi-Fi hardware sales will reach $3.7 billion, leaping 49 percent over 2003 revenue.

Cisco maintains its leadership in the worldwide wireless LAN hardware market, owning 16 percent of the sector. The standing follows the company's second consecutive $100-million-plus quarter.

Cisco-owned Linksys, a leading provider of hardware aimed at wireless consumers, holds second place overall with 13 percent of the WLAN hardware market, according to Infonetics.

The numbers mirror those recently released by other researchers. Synergy Research estimated WLAN equipment sales grew nine percent over the previous quarter, accounting for sales of nearly $715 million. Sales were up nearly 28 percent over last year, according to Synergy. The Dell'Oro Group estimated SOHO shipments grew 73 percent over 2003.

The key to WLAN sales continues to be data mobility—"especially the consumer segment, which is on fire," said Richard Webb, Infonetics directing analyst and author of the report.

Small offices and home consumers remain the major population purchasing WLAN hardware. Consumer sales, however, lost a point to service providers and enterprises, which increased by one point in the third quarter.

"The consumer, enterprise, and public Wi-Fi hotspot segments together will drive overall growth in wireless LAN hardware over the coming five year period," said Webb.

The research firm predicts that in 2007 more than 84 million WLAN hardware devices will ship, creating an annual growth rate that will be 252 percent higher than 2003.

Although the numbers of Wi-Fi devices shipped will increase, revenue will be flat, or even lower. "ASPs will be eroded by increased vendor competition," said Webb. An exception to that prediction is the Wi-Fi switch segment, which, the research said, "is growing strongly."

The Wi-Fi market is "cut-throat," says Synergy's Aaron Vance. Synergy, also recognizing the increasing prominence of Wi-Fi switches, has begun tracking their sales.

Revenue from Wi-Fi switches skyrocketed 80 percent in the latest quarter.

"While this is in large part due to low base figures from the previous quarter, this young market segment has great potential," said Webb. Infonetics points to Airespace as an example of the switch companies that are "seeing increasing market traction."

Two thirds of WLAN hardware revenue come from Wi-Fi Access Points, says the researcher. While sales of standalone APs increased six percent from the second quarter worldwide and nine percent among service providers and enterprises, consumers are opting for "the more flexible functionality of wireless routers and gateways," according to Webb.

"Broadband users are upgrading from basic wired CPE (DSL and cable modems, for example) to wireless gateways in huge volumes," according to Webb.

Nearly half of Wi-Fi hardware is sold in North America, with the remainder split between Europe and Asia.



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