Are wireless LANs growing or declining? It depends which market researcher you talk to. More importantly for IT managers, the technology choices are just as obscure. Sales appear to have actually tailed off in the final quarter of 2004, and all the vendors must be looking anxiously at how their products will evolve.
For the moment, vendors can still raise an argument over whether you should be buying centralised switches or appliances. However, it is already clear that the question will go away, as WLANs will ultimately be merged with other networking gear - and built into everything.
Good year, flat quarter
Over the whole of 2004, sales of WLAN equipment grew 30 percent over 2003, according to Synergy Research, and 15 percent according to the more sober Infonetics Resarch, which puts the total market at $2.8 billion.
The researchers disagree over the last quarter, and fall out completely over the future. Synergy reckons sales were up 10 percent over the third quarter, while Infonetics reckons they were down by 21 percent. The other major provider of market share, Dell'Oro Group, splits the difference, reckoning it was about flat.
"It's about buying cycles," says Greg Collins, senior director of wireless LAN research at Dell’Oro. "And the deals have been big in the enterprise segment, so the market is lumpy, as they say." Some orders fell before the end of the quarter, and some after - and presumably the vendors each told slightly different lies (sorry reported different figures) to all the analysts.
Collins agrees that the enterprise market actually declined in the quarter, but takes a cheerful view: "That's temporary. Q3 is typically strong and Q4 is weaker." Over the full year, the enterprise market has grown by 78 percent, he reassures us, and happily predicts growth of about 13 percent a year till 2009.
Not so, says Infonetics. This is the peak. From now on, revenues will decline every year, it reckons. Unit sales will boom, they'll just be a whole lot cheaper. "The downward trend in revenue is expected to continue over the next few years," says Richard Webb, directing analyst at Infonetics.
Switch leaders separate
Zooming in on the switch sector, the seasonal changes are down to the leader in wireless switches, Symbol, whose key customers, in the health sector and retail are very seasonal. "Retail companies make their biggest sales in Q4, so they hesitate to deploy new technology then," says Collins. Since Symbol makes up 20 percent of the enterprise market (or 29 percent, if you ask Synergy), and an
even higher share of the WLAN switch market, and bumps in its graph show up in the whole picture.
Within the whole enterprise market, Cisco is still top dog, trailed by Symbol, then 3Com, with Airespace coming in fourth, according to Synergy.
Within wireless switches, the specialist devices that manage specialist thin access points, the pattern of last quarter was repeated. Symbol has 46 percent of the WLAN switch market according to Dell'Oro, and Airespace comes next with about 30 percent (half of it coming through OEM partners Nortel and Alcatel). Aruba repeated its 13 showing of three months ago, and disappointingly, the other wireless LAN startups, Trapeze, Chantry and the rest, did not register on the headline figures.
Which architecture is winning?
Three months ago, the Q3 figures were revolutionary, prompting three separate technology debates.
- Cisco had to acknowledge that the breakthrough of wireless LAN switches meant its approach of autonomous APs was not enough - and bought the leading start-up, Airespace.
- Symbol appeared to finally notice the startups in its space, with their more software-centric approach, and belatedly revived the thin-versus-fat AP argument.
- Bluesocket and the other appliance vendors looked glum, as Cisco's Airespace purchase looks likely to eventually remove their main market - linking Cisco's current autonomous access points. Appliance vendor Vernier announced its intention to go off and be a security vendor.
Don't look for any reactions to all this in this set of figures, however. Cisco's purchase of Airespace was announced after the end of the year, so will have had no effect on them. "Cisco had a strong quarter, still with autonomous APs," says Collins. "Once the acquisition is complete, we anticipate enterprises moving more to the centralised model."
For now, though, another good quarter for Cisco's old-style autonomous approach is good news for the appliance vendors. Integrating Airespace will take a long while, leaving plenty of opportunity for appliances, says Dave Danielson vice president of marketing at Bluesocket: "Any customer who doesn't want to envision a forklift upgrade to Airespace should take a hard look at us. There are economic reasons why we make sense as Cisco works to envision a new way to go."
Collins agrees: "Longer term, Bluesocket may have issues, but right now, there are plenty of Cisco APs that need management."
More acquisitions should follow Cisco's, but the web is tangled. Aruba is already rumoured to have rejected a suit from Juniper, which also has a relationship with Collubris. Nortel is definitely looking for a different partner now Cisco owns Airespace. Trapeze is likely to be cheaper than Airespace, but already has a tight OEM deal with 3Com.
Prepare for consolidation
Everyone is now predicting consolidation in the sense of vendors being bought up - though whether future purchases can command the same price as Airespace is open to question. In the long term, however, the whole sector faces consolidation, as wireless LAN management will become just one more set of features to be built into standard Ethernet switches.
NextHop is planning to use the WLAN technology it acquired from Legra to offer this in a future version of its widely used routing software. And 3Com is understood to be planning to use technology from Trapeze to add wireless LAN to its own switches.
At that stage, will it even make sense to talk about a WLAN market?