| WLAN outlook strong despite standards uncertainty |
Jan. 21, 2002
Natick, MA -- (press release excerpt) -- According to recent research conducted by Venture Development Corporation, the global wireless LAN hardware market reached almost $1 billion in 2001 and is forecast to grow by over 25% annually to exceed $2.3 billion by 2005. Although, at 4%, growth in 2001 was significantly lower than historical levels, the market is poised to rebound by late 2002. The technology has successfully migrated from a specialized vertical solution to one that has broader mass-market appeal.
Global WLAN Market Growth Segmented by Product Categories
(in USD Millions)
Note: Figures represent supplier revenues and not end user consumption
While VDC expects considerable growth opportunities over the next four to five years several barriers exist that could impede these developments. Among the most significant are standards debates and their potential for market confusion. Although the development of WLAN standards has been penultimate to the success of the market, suppliers are wielding the standards development process as a competitive tool. As the WLAN market has been and continues to be a standards driven market, opportunities for hardware based differentiation are increasingly limited. Therefore, suppliers (specifically component and IC suppliers) want to be as close to the standards process as possible to take advantage of first mover opportunities.
Currently 802.11b is widely accepted as the de facto WLAN standard for most applications. While we expect IEEE standards to remain dominant -- i.e. HomeRF and HiperLAN2 will not achieve mass-market acceptance -- the course of adoption is unclear. As most current and emerging applications do not require a data rate that exceeds 11Mbps, we expect 802.11b solutions to continue to represent the primary technology over the next 12 to 24 months. However, migration to 802.11a systems is expected to occur, with the primary drivers being availability of eight channels and higher bandwidth. The fact that 802.11a is not currently recognized as a global standard is not expected to impact near-term demand in home and SOHO segments, however, will impact opportunities in the rapidly emerging enterprise sector. Nevertheless, global certification will be required for 802.11a to be recognized as a viable long-term standard.
One factor that could impact the migration path of WLAN solutions is 802.11g. This standard has passed the letter ballot stage, however, has yet to be ratified as a IEEE standard. Although pre-standard ICs should be available in the first half of 2002, we do not expect 802.11g commercialization until Q4 2002 the earliest. Ultimately we believe that the market will continue to support multiple standards, largely based on application requirements. Therefore we do not expect 802.11g to displace the opportunity for 802.11a -- operation in the 5GHz band and greater number of channels available will prevent this. Rather, 802.11g will have a greater displacement impact on existing 802.11b systems and hybrid 802.11a/g solutions are expected to represent the primary opportunity.
"The 2001 Global WLAN Business Planning Program" consists of two reports that cover the markets for both WLAN hardware and WLAN integrated circuits (chipsets). Each report is designed to provide subscribers with relevant, up-to-date market intelligence to support product planning, market development, and channel partnering decisions. The global WLAN market is estimated, forecasted, and trended for a number of WLAN offering categories, including WLAN radios, WLAN access points, WLAN residential gateways, WLAN bridges and WLAN ICs. The reports cover application requirements, end-user market segments, distribution channels, and regional markets. Moreover, the study provides in-depth analyses of current and developing competitive environments, including supplier market shares by product category and regional market. The study concludes with a discussion of major trends, issues, and developments shaping structural change to the market, the status of existing and emerging product developments, and strategic recommendations for leading and emerging suppliers of WLAN equipment and systems.
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