802.11 Kit Sales: Ka-Ching!

The market for wireless LAN equipment sales continues to rocket skywards, with analysts forecasting that quarterly revenues may break through the magic $1 billion barrier before the end of this year.

According to the number crunchers at Synergy Research Group Inc., total sales of 802.11 kit increased 9 percent in the fourth quarter of 2003, generating revenue of $751.9 million -- a massive 55 percent increase year-on-year (as shown in the diagram below).

Approximately 9.5 million 802.11 units (defined as access points, bridges, PCMCIA cards, embedded clients, switches, and voice-over-WLAN phones) were shipped in the quarter, a 24 percent increase on the third quarter’s 7.5 million (see 802.11 Kit Sales Soar).

Synergy’s senior analyst Aaron Vance argues that such growth is set to create a billion dollar market in the near future. “We continue to approach the $1 billion market,” he comments. “Q3 was under $700 million, whilst this quarter was over three quarters of a million. I would anticipate by late 2004, early 2005, we will be looking at a billion dollars a quarter.”

In terms of vendor breakdown, Cisco Systems Inc. (Nasdaq: CSCO) continues to dominate enterprise equipment sales, despite an 8.5 percent fall in market share. Vance is unconcerned by the company’s 36 percent share standing, down on the previous quarter’s 44.5 percent, claiming that the drop is likely to be a freak occurrence.

“It looks like Q3 for Cisco was a bit of an anomaly and Q4 has come back down to a more reasonable level. Q4 is actually higher than Q2. Q3 appears to be a bit of a spike; as for the year in total, Cisco gained almost 8 market-share points.”

Symbol Technologies Inc. (NYSE: SBL) scoops the silver medal with 15.5 percent share of the enterprise kit market, followed by 3Com Corp. (Nasdaq: COMS) and Proxim Corp. (Nasdaq: PROX), winning, respectively, 8.4 and 7.9 percent.

Meanwhile Linksys has increased its lead in the SOHO/Home wireless LAN equipment market, up half a percent to 22.3 percent market share. Synergy’s man believes this slight growth is down to the effects of its acquisition by Cisco (see Cisco Completes Linksys Acquisition).

“Since the acquisition we have been waiting to see if Cisco can help grow Linksys’s business on an international basis. We have seen that happen this quarter. Prior to Q4, its international revenues were only about 5 or 6 percent of its business. This quarter it was 12 percent of overall revenue.”

Linksys will have to keep a close eye on its competitors, however, as both D-Link Systems Inc. and Netgear Inc. (Nasdaq: NTGR) are breathing down its neck (17.9 and 17 percent market share, respectively).

— Justin Springham, Senior Editor, Europe, Unstrung

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