Wireless LAN technology is showing a key sign of maturity: after years of hype, market researchers are adjusting their forecasts down. They have realised that office wireless networks are complex, and not quite so desparately-needed as they foretold, it seems. However, the best current answer to that complexity, wireless switches, are still reported to be doing well.
Analyst Synergy Research, which has been predicting a billion dollars of WLANs business per quarter, cut back its expectations drastically, reporting only $659 million sales in Q1 of 2004. That's a fall of more than 12 percent on the $752 million it reported for the last quarter of 2003.
Oh dear. Is the market for Wi-Fi actually falling? Not according to senior analyst Aaron Vance, who says that the earlier figure was wrong. Naturally enough, he passes the blame to the vendors who apparently didn't give Synergy the right data back then: We had to go back and adjust some of the revenues, and that affected the overall market size," he told the Unstrung wireless industry news site. "Some of the vendors were giving us end-user revenue as opposed to recognised revenue, which is the number we want to publish It happens some of the time." Well done Aaron.
"The revised figures will, however, reduce the chances of creating a billion-dollar quarterly market by the end of 2004." says Unstrung. Realistically, it will be closer to 2005, Vance tells them, begging the question of how you can actually get closer to 2005 than the end of 2004.
The slightly-more-sensible Infonetics Research (well, it was sensible enough to employ this author a couple of years back) doesn't reckon on a billion-dollar quarter this side of 2007, when the annual market will be $3 billion. Infonetics hasn't had to revise its figures down, though they are now high compared with Synergy's, with $696 million for Q1 2004, up two percent on the $682 million it reckons happened in Q4 of 2003.
Infonetics is predicting only two percent growth for the whole of next year, due to eroded prices, produced by competition, but it sees wireless switches as a hotspot, with "stellar" growth. The switch sector business has gone up 121 percent over the quarter, and ports have gone up by 158 percent (so not too much price erosion there). Switches are going to grow in double digits every quarter this year, and double digits per year till 2007, says Infonetics' Richard Webb.
"Cisco's recent SWAN announcement further validates the wireless LAN switch concept, and will help boost sales," said Webb. Indeed, having been hostile to the concept of wireless switches, Cisco effectively adopted the idea - as long as said switch is a module in one of its Catalyst switches. This is the kind of move that "legitimises" a previously freaky idea such as wireless LANs, making it acceptable to conservative IT managers, and boosting business for start-ups.
Despite switches doing well, they're still a comparatively small part of the overall market ($26 million according to Synergy). In fact the enterprise as a whole is relatively small, says Infonetics, with SOHO and consumer products making up 60 percent of the market. The leader of the whole WLAN pack is Cisco's small-business subsidiary Linksys, with small business providers D-Link and Netgear coming second and third (Synergy agrees).
Even in the enterprise, switch vendors come off poorly against Cisco whose wireless switch doesn't figure in that quarter's revenue. Both research companies put Cisco at the top of the enterprise tree, with Synergy giving it 42 percent of the enterprise wireless LAN market, up from 36 percent the previous quarter. The next threee are Symbol, 3Com and Proxim have, with 12.1 percent 7.8 percent and 4.9 percent of the market.
While Symbol has a wireless switch, most of its revenue still comes from access points. Switch startups Trapeze, Airespace Aruba and the rest aren't registering on the overall wireless charts yet.