February 14, 2002, 5:09 PM — Wireless LANs that use the IEEE 802.11b and 802.11a standards stormed the market in the fourth quarter of last year, with revenue worldwide growing 21 percent sequentially from the third quarter, market research company Dell'Oro Group Inc. reported Thursday.
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, an analyst at Dell'Oro, in Redwood City, California.
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 54M bps (bits per second) compared to a maximum of 11M bps for 802.11b. Wireless pioneer Proxim Inc. and SMC Networks Inc. each 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 Inc., 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. Low-price equipment makers Buffalo Technology Inc., Linksys Group Inc. and D-Link Systems Inc. ranked behind Cisco and saw gains of 36 percent, 28 percent and 44 percent respectively.
Home LAN users are rapidly adopting 802.11b wireless LANs as lower cost equipment comes on the market, he said. Revenue of network access points (hubs through which clients on the LAN communicate) for small offices and homes grew 40 percent in the quarter, compared to 12 percent growth for enterprise-class hubs, Collins said. Revenue of 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. 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.
Experimentation with wireless LANs in enterprises in some cases is being 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.