Wireless LANs Take Flight

Wireless LANs that use the IEEE 802.11b and 802.11a standards stormed the market in the fourth quarter of 2001, with revenue worldwide growing 21 percent sequentially from the third quarter, market research company Dell'Oro Group has reported.

As the market grew, its growth rate bounded ahead too: revenue had increased just 5 percent from the second to the third quarter, said Greg Collins, a Dell'Oro analyst.

The fourth quarter saw the first market entry of products using the new 802.11a standard, which offers higher performance than the earlier 802.11b--up to 54 megabits per second compared with a maximum of 11 mbps for 802.11b. Wireless pioneer Proxim and SMC Networks both introduced 802.11a products in the quarter, Collins said. However, the new technology accounted for less than 1 percent of total revenue for the market of wireless LANs that use the IEEE 802.11b and 802.11a standards.

Total revenue for that market reached $363.3 million. Revenue leader Cisco Systems, which holds 20 percent of the overall market and a whopping 45 percent of the market's enterprise equipment segment, saw already healthy revenue grow 8 percent. Ranking behind Cisco are low-price equipment makers Buffalo Technology, which gained 36 percent; Linksys Group, up 28 percent; and D-Link Systems, up 44 percent.

Interest Across Markets

Home LAN users are rapidly adopting 802.11b wireless LANs as lower-cost equipment comes on the market, Collins said. Sales revenue from network access points (hubs through which clients on the LAN communicate) for small offices and homes grew 40 percent in the quarter, compared with 12 percent growth for enterprise-class hubs, he added. Revenue from client modules grew 15 percent.

Business demand for the wireless LANs was strongest in specific industry segments, such as health care, manufacturing, and retail, where mobility offers new capabilities. For example, some retailers are using 802.11b-equipped barcode scanners to keep track of inventory in stores, Collins said.

General enterprise adoption still is in an early stage as companies try to figure out how a wireless LAN can help their employees work, Collins noted. It can help managerial workers who attend a lot of meetings stay in touch with e-mail and information on the corporate network, he said. Adding employees to the network or moving workers from one desk to another also could be much easier with wireless LANs.

"A lot of IT departments spend a lot of time moving people around," Collins said.

Still Some Concerns

Experimentation with wireless LANs in companies in some cases is held back by the weak economy, he added.

"I think they're interested in it, but their ability to experiment is limited because they don't have the funds," Collins said. "A lot of the IT managers we've talked to have their budgets in maintenance mode," he added.

Concerns have been raised over the past several months about the ease of intrusion into 802.11-based wireless LANs. However, those concerns are not significantly hampering demand, Collins said. Enterprises are taking advantage of added security features built into higher-end equipment, and home users are not as concerned about security for their applications, mainly surfing the Web.