WLAN growth strong in A-P, but prices tumble

The emerging market in the Asia-Pacific region for Wireless LAN (WLAN) equipment grew by 75 percent in terms of units shipped from 2001 to 2002, but prices fell by about one fifth on average, holding down revenue growth, according to figures released Monday by analyst company Gartner Inc.

Shipments of WLAN equipment in Asia-Pacific reached 3.4 million units in 2002, up from 1.9 million in 2001. End-user spending rose 41.4 percent to US$390.1 million in 2002, from $275.9 million the year before. That translates into an average 20.4 percent fall in prices over the period.

The strong growth of WLAN in Asia has been driven by increased competition amongst a growing number of vendors and widespread promotion of the technology by both vendors and operators. Asian vendors selling through service providers into the consumer market has driven growth ahead of that seen outside Asia, according to Gartner, in Stamford, Connecticut.

Japan is easily the biggest WLAN market in Asia-Pacific, and the country's largest WLAN vendor, Buffalo/Melco Inc., maintains a 36.6 percent share by unit shipment. It is particularly strong in the important home and home office markets with its AirStation range, according to Gartner.

South Korea, Taiwan, Australia and Singapore also have substantial WLAN markets, with Singapore's market more than doubling in size from 2001 to 2002. WLAN shipments grew 143 percent in Singapore to 81,300 units, with revenue up 95.8 percent to $14.3 million.

The market remains fragmented, with vendors outside the top five of Buffalo/Melco, Samsung Electronics Co. Ltd., D-Link Systems Inc., Cisco Systems Inc. and Elecom Co. Ltd. holding on to 40 percent of the market.

Gartner sees continued strong growth in the WLAN market. Bundling of WLAN services with broadband Internet access and the demand for mobile access to corporate applications will continue to drive that growth, along with falling prices for equipment and services, Gartner said.

Another key driver is the bundling of wireless connectivity options into PCs, such as systems based on Intel Corp.'s Centrino chip package.

Despite strong growth for home and office-based WLANs, analysts are less certain that the public WLAN hotspots which are being installed in many Asian cities have a future with a viable business model.

"Despite increasing numbers of laptop computers equipped with WLAN capability, only a tiny fraction of those laptops will ever pay to connect to a public WLAN network," the Shosteck Group wrote in a report late last year. "In short, we believe that wireless operators will find public WLAN networks to be an unprofitable loss leader."

There will be around 20,000 public WLAN hotspots in Asia by the end of this year, a figure expected to rise to 60,000 by 2007, Gartner has said.

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