According to a new study by Frost & Sullivan, the international market consultancy, revenues for the total worldwide wireless local area network market were expected to reach US$1.6 billion in 2002.
While growth in unit shipments will be stimulated by standardisation, interoperability and growing adoption rates, fiercer competition is causing declining average selling prices and depressing revenue growth in the process.
The introduction of industry standards, the maturity of WLAN technology and the resulting reduction in prices have helped lift sales and encouraged the development of new applications. These range from free public access hotspots to seamless roaming between wireless data and phone networks.
The advent of the IEEE 802.11 suite of WLAN standards (also know as WiFi) has revolutionised the industry over the last five years, allowing the introduction of standardised radio products. However, the adoption and use of WLAN products can be hampered by interference from other radio devices operating in the increasingly crowded 2.4 GHz ISM band. The 2.4 band is currently used by most WLAN installations, including 802.11b, the most popular WLAN technology standard.
Frost & Sullivan believes that there will be a migration towards higher speed WLAN technologies operating in the 5 GHz band where the spectrum generally contains less potential interference. The IEEE 802.11a and IEEE 802.11g will replace 802.11b as the most popular WLAN standards over the next four years.
In the short-term, the market will see significant opportunities for dual mode equipment, where different flavours of the 802.11 suite are combined to provide WLAN support in both the 2.4 GHz and the 5 GHz bands. Understanding the changing WLAN environment will be a major challenge for WLAN adoption, with confusion over the multiple standards likely to increase. Enterprise adopters should be wary of the need to “future proof” their networks to meet their long-term mobility needs.
There is no doubt that WLAN security is a weak point and continues to be a major stumbling block to widespread enterprise adoption of the technology. Enterprise customers are faced with a choice of security options when they deploy WLAN.
They can use Wi-Fi’s WEP, set up a virtual private network (VPN), or opt for an authentication method such as the Extensible Authentication Protocol (EAP). Enterprise WLAN vendors such as Cisco have already moved to bring out their own security enhancements to Wi-Fi’s WEP protocol.
If the enterprise is not overly concerned about the security of their network and the integrity of their data, then WEP is a sufficient option. A VPN solution will work well in small- and medium-sized environments where network expansion is not an issue. For large enterprises, the best choice seems to be EAP. All of these choices are now available because the WLAN industry has not yet introduced a security solution that is sufficient for the task at hand.
Enterprise WLAN vendors are not the only ones who can encounter obstacles in the WLAN market. Vendors who focus primarily on the consumer/SOHO market, despite the ready acceptance by customers, can find that it is a treacherous one with low margins and high unit volumes.
Here, success can be temporarily attained through a product offering with a combination of low prices, broad product line and ease-of-use. In a backup strategy, vendors are striking alliances to supply product to service providers.
Over the next two years, the situation will become more difficult for all vendors with the expected widespread introduction of embedded radio chipsets in products such as computers, handhelds, set-top converters and other products that benefit from being connected to a network’s resources.
With so many different hardware vendors, Frost & Sullivan expects that there will be a consolidation period occurring in the industry during 2003. Without much differentiation between products, competitors will have great difficulty in maintaining their market positions. Falling hardware revenues are expected to bring about consolidation whereby competitors will withdraw from the market totally or outsource their manufacturing needs.
