802.11 WLAN Shipments Double

Manufacturers of wireless LAN equipment shipped twice as many products in 2002 as they did in 2001, according to the number-cruncher boffins at the Synergy Research Group Inc. (see WLAN Market Doubled in '02).

About 16 million 802.11 units (defined as access points, bridges, PCMCIA cards, embedded clients, voice-over-WLAN phones) exited vendors' factories last year, compared with a smidge over 8 million in 2001.

Cisco Systems Inc. (Nasdaq: CSCO) was top banana, according to the Synergizers. It bagged 14.2 percent of all 802.11 WLAN equipment revenues (see table below).

Table 1: Worldwide WLAN Equipment Revenue Market Share 2002
Rank Vendor Market share 2002 Market share 2001
1 Cisco Systems Inc. 14.20% 18.20%
2 Linksys Group Inc. 11.40% 7.60%
3 Buffalo Technology (USA) Inc. 10.00% 9.10%
4 D-Link Systems Inc. 8.80% 4.50%
5 Netgear Inc. 7.10% 2.00%
Source: Synergy Research Group

Good news? Indubitably. Still, there are a couple of sharp rocks lurking amid the placid waters of Synergy's tastefully designed charts'n'tables.

The main one is that, while shipments doubled, the revenues that vendors derive from them did not. According to Aaron Vance, an industry analyst at Synergy, "significant price pressure" meant the value of the market increased by just 28 percent, from $1.42 billion to $1.79 billion. (The total market in 2000 was worth just $78 million, according to Synergy figures).

Further, the bulk of the 802.11 bits and bobs were shipped to consumers and piddly little SOHO installations -- not honking great enterprise sites. Vance expects further significant growth in 2003 and certainly envisages a better year for the enterprise market, where Cisco is the clear number one (see table below).

Table 2: Worldwide Enterprise WLAN Revenue Market Share 2002
2002 2001
Cisco 31.50% 29.70%
Symbol Technologies Inc. 13.80% 11.40%
Proxim Corp. 8.90% 5.40%
Source: Synergy Research Group

"I was surprised by the sluggishness of the enterprise market in 2002. However, there are signs that IT budgets are coming back and increasing in value, and I expect enterprises to be spending their money on wireless equipment," says the Synerman.

And he believes Proxim Corp. (Nasdaq: PROX) could make it to number two in the enterprise listing in 2003. "If it can further digest the Orinoco business line, then it has a chance of moving up. However, not everyone is as good as Cisco at integrating acquired businesses," states Vance, in a sudden bout of base covering (see Proxim Buys Agere WLAN Biz).

In the SOHO/home market rankings, Linksys Group Inc. is top dog. This market has seen massive growth in 2002, says Vance. "At the beginning of the year it was accounting for about 35 to 38 percent of the total dollar value of the market, but by end of year it was accounting for about 55 percent."

Table 3: Worldwide SOHO/Home WLAN Revenue Market Share 2002
2002 2001
Linksys 20.70% 19.70%
Buffalo 18.10% 23.70%
D-Link 16.00% 11.60%
Netgear 13.00% 5.30%
Source: Synergy Research Group

And will Linksys retain its top spot in 2003? "That company is just a machine in terms of shipping products. It just had its best-ever sales period, the fourth quarter of 2002, when it shipped more than a million units. It expects to ship more than 5 million in total in 2003, and if it achieves that it will be hard for anyone to beat."

Here's something else to stick in your pipe: A doubling of 802.11 shipments should not be taken as an indication that 802.11 is sweeping the world like the latest dance craze. Just because the number of units doubles, that doesn't mean the number of WLAN products being used has doubled. In fact, a growing number of laptop PCs and PDAs have embedded 802.11x chips, but many of them remain unused [ed. note: like the one in this'ere IBM X23 Thinkpad].

In technology terms, Vance says 802.11b accounts for about 95 percent of the units shipped and about 98 percent of the total value of the market in 2002. "802.11a-only sales are really tailing off. People are waiting now for dualmode systems."

— Ray Le Maistre, European Editor, Unstrung
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