New protocol helps boost Wi-Fi sales

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The market for IEEE 802.11 wireless LAN equipment continued growing in the second quarter, driven in part by users embracing the recently standardized 802.11g technology.

Worldwide unit shipments of 802.11 gear, also generally known as Wi-Fi, grew 6 percent from the first quarter, though falling prices limited revenue growth to 2 percent, according to Greg Collins, an analyst at Dell'Oro Group Inc., which compiled the quarterly figures. Compared to the second quarter of last year, revenue was up 10 percent while 69 percent more units were shipped, Collins said.

The market as a whole generated revenue of US$419 million in the quarter, the Redwood City, California, market research company said.

Revenue from 802.11g products grew 48 percent sequentially and made up 24 percent of total market revenue. Standard 802.11g products are compatible with the existing 802.11b standard but have a theoretical maximum carrying capacity about five times that of the earlier products. The Institute of Electrical and Electronics Engineers Inc. (IEEE) approved the 802.11g standard in June, but some vendors had began shipping products based on draft versions of the standard around the beginning of the year.

In terms of the number of units shipped, 802.11g products made up 23 percent and 802.11b was 76 percent. Revenue from sales of 802.11b products are shrinking along with declining prices, which fell about 10 percent in the second quarter, according to Dell'Oro.

Dual-band products, which also support the 802.11a standard, made up most of the remaining 1 percent of volume shipments. Products that support only 802.11a now make up a small niche market, Collins said. Like 802.11g, the 802.11a technology has a maximum data rate of 54M bps, but it uses different radio frequencies.

Dual-band unit shipments were roughly flat and revenue was down slightly from the first quarter, he added. However, Collins expects dual-band sales to start picking up next year as prices fall to approach what customers pay for 802.11g gear today.

Cisco Systems Inc. led the market with 17 percent of total revenue, coming in just ahead of Melco Inc.'s Buffalo brand, which had 15 percent. Linksys Group Inc., which was acquired by Cisco in June, would have led the market in revenue but pushed back its revenue reporting after it switched to Cisco's procedures, Collins said. Linksys recognizes revenue when a product is sold into the channel that will resell it to end customers, whereas Cisco only recognizes revenue when the end user buys the product, Collins said. He sees Cisco holding more than one-third of the market once Linksys revenue reporting catches up later this year.

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