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WLAN’s Billion Dollar Wait

Light Reading
LR Mobile News Analysis
Light Reading
5/21/2004

The abacus lovin' number crunchers at Synergy Research Group Inc. have reported lower-than-forecast wireless LAN equipment sales for the first quarter of 2004, dampening previous hopes that the market will break through the magic $1 billion barrier before the end of this year.

According to the company’s latest report, total sales of 802.11 kit -- defined as access points, bridges, PCMCIA cards, embedded clients, switches, and voice-over-WLAN phones -- hit $659.4 million in the quarter.

This figure is a 12.3 percent drop on the $751.9 million revenue reported for the fourth quarter of 2003 (see 802.11 Kit Sales: Ka-Ching!).

Synergy’s senior analyst Aaron Vance claims the fall is not the result of an actual decline in market demand for 802.11 kit. “We had to go back and adjust some of the revenues, and that affected the overall market size. Some of the vendors were giving us end-user revenue as opposed to recognized revenue, which is the number we want to publish… It happens some of the time.”

The revised figures will, however, reduce the chances of creating a billion-dollar quarterly market by the end of 2004. “Realistically, it will be closer to 2005,” admits Vance.

In terms of vendor breakdown, Cisco Systems Inc. (Nasdaq: CSCO) continues to dominate enterprise equipment sales, with a 42 percent market share (up from 36 percent the previous quarter).

The U.S. vendor left Symbol Technologies Inc. (NYSE: SBL), 3Com Corp. (Nasdaq: COMS), and Proxim Corp. (Nasdaq: PROX) trailing in its wake (12.1, 7.8, and 4.9 percent respectively).

Meanwhile, Linksys has increased its lead in the SOHO/Home Wireless LAN equipment market, up 4 percent to 26.3 percent. D-Link Systems Inc. takes the silver spot with 19.9 percent, followed by Netgear Inc. (Nasdaq: NTGR) at 11.9 percent.

The nascent wireless LAN switch and “light” access point market has also kicked into life, with the likes of Airespace Inc., Aruba Wireless Networks, Extreme Networks Inc. (Nasdaq: EXTR), Hewlett-Packard Co. (NYSE: HPQ), ReefEdge Inc., and Symbol Technologies Inc. (NYSE: SBL) shipping products to create a market worth “nearly $26 million” in the first quarter of this year.

— Justin Springham, Senior Editor, Europe, Unstrung

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