WLAN's Q1 Status Quo
May 18, 2005
The reports on the first quarter of 2005 are in. Depending on how you look at it, sales are up, sales are down, and profits are practically nonexistent.
The initial reports on the state of the Wi-Fi networking industry for the first quarter of 2005 are now coming in from research firms like Synergy Research Group, Dell'Oro Group and In-Stat/MDR. While small details differ, the overall picture is the same:
Compared to the first quarter of last year, things are up. Compared to the final quarter of 2004, things are down overall (though things are up quarter-to-quarter on the SOHO side; see below).
And, according to In-Stat at least, the erosion of prices on Wi-Fi equipment means "few vendors are making much money in this market segment at present."
Compared to last year, overall sales in enterprise-class WLAN equipment were up 10 percent, according to Synergy. However, compared to the final quarter of 2004, enterprise equipment sales were down 6 percent (according to Dell'Oro) or 9 percent (says Synergy).
Numbers in this area were likely complicated by one particular acquisition: Cisco's buying of Airspace. In a company statement, Dell'Oro's senior director of Wireless LAN Research, Greg Collins, said, "their customer base likely delayed some purchases" because of the announcement. It was finalized in April, the beginning of the second quarter of 2005.Synergy began tracking WLAN switches/controllers and "light" APs as a separate category in 2004, and says that market segment overall by Q1 2005 reached $62 million—that's including sales for Airespace products from before the Cisco buyout.
The top players in Enterprise product sales overall were Cisco, Symbol, and Airespace. (Dell'Oro gives fourth place to Aruba Networks, while Synergy says it's 3Com. Most of the rankings are based on numbers the vendors report to the analysts.)
Consumer/SOHO wireless products were up 13 percent from last year, and even up 4 percent from last quarter, thus slightly outdoing the 2004 holiday season. The market leaders haven't changed in months, with Linksys in the lead with 26 percent of the market, followed by D-Link, Netgear, and Buffalo Technology. In-Stat predicts the SOHO market will continue to grow, from 17.6 million units last year to 32.6 million in 2009.
Cisco continues to lead the pack on Wi-Fi product sales overall, even outdoing its own Linksys subsidiary. They have 18.4 and 15.7 percent of the market, respectively, according to Synergy.
Dual-band 802.11a/g will grow in the enterprise market, where buyers tend to stick with established standards but also want the dual-band aspect to beat interference issues.
The driver in the home market continues to be 802.11g, especially with prices continuing to drop. But a transition is coming to 802.11n/MIMO (multiple in, multiple out) products. In-Stat analyst Sam Lucero forecasts a "gradually shrinking price premium" for MIMO technology, which is slowly debuting in products now, but won't be part of a standard for a couple more years. Lucero says the MIMO products' "dramatically increased range appears to be resonating with consumers."