Multimode Is More
Analysts see 2004 as a watershed year for the 802.11 chip market, as silicon vendors try to move beyond the SOHO scene and into the enterprise, cellphone, and DSL markets.
2003 has been a banner year for wireless LAN silicon. In-Stat/MDR predicts that by the end of December around 33 million chipsets will have been sold, compared to 20 million in 2002.
Next year, analysts expect volumes to continue increasing, but with an increased industry focus on delivering chipsets that support multiple 802.11 standards for the enterprise market, as well as more low-power 802.11 chipsets, and tighter integration between the WLAN radio and DSL components in the home gateway market.
"Next year will certainly be a defining year in terms of volume and where the market is going beyond the home," says Will Strauss, principal consultant at Forward Concepts Co.
Here's a rundown of the technical trends that analysts consider important in 2004:
Multimode chipsets: Intel Corp. (Nasdaq: INTC) will provide the major launch in this area with its a/g product expected around the middle of 2004 (see Intel's A Train Arrives (At Last)). These kinds of chipsets should provide support for the a spec (54 Mbit/s over 5GHz) and the new g spec (54 Mbit/s over 2.4GHz), as well as backwards compatibility with the older b standard (11 Mbit/s over 2.4GHz).
"To me, the big thing is the wave of highly integrated chipsets coming that should drive takeup in the enterprise," says Bob Wheeler, analyst at the The Linley Group.
Wheeler expects that Broadcom will follow its b product with a g version. "The way that Broadcom is going to prevent some of the Taiwanese players -- the cheaper players -- getting a foothold in the market is by going to a single-chip solution that is hard to compete with [on a technological level]," he says.
Integration with DSL gateways: Back in the home market, analysts expect this to become more prevalent. "Next year, I think we could see wireless LAN functionality get incorporated into DSL chips," says IDC's Ken Furer. All the analysts say that one of the reasons that Conexant Systems Inc. (Nasdaq: CNXT) and GlobespanVirata Inc. (Nasdaq: GSPN) recently decided to merge is to exploit this market (see Conexant, Globespan Merge).
All four analysts that Unstrung spoke to expect to see further consolidation in the market as margins continue to fall, making it harder for startups to compete with larger players like Broadcom, Intel, and Texas Instruments Inc. (NYSE: TXN) as they ramp up production (see It's WLAN Seduction Season).
"I think the biggest thing we're going to see is a market shakeout," says Craig Mathias, a principal with Farpoint Group. "By the end of next year we expect to see about half the number of silicon vendors that there are today left standing." — Dan Jones, Senior Editor, Unstrung