Both the mobile infrastructure space and wireless local area network arena are heading toward sunnier times, according to reports by the Dell’Oro Group.
WLAN is enjoying a big boost with a 75-percent increase in enterprise-class equipment sales. The study also expects that segment to grow at an annual rate of 47 percent through 2008.
“Until recently, corporations have been reluctant to adopt wireless LANs, primarily because of security concerns,” said Greg Collins, senior director of wireless LAN research for Dell’Oro Group. “Now with improvements in management, encryption and user authentication, wireless LANs will penetrate larger corporations because the technology improves productivity by allowing users to connect to the network from anywhere.”
Total sales of enterprise equipment for WLAN will rise to $2.1 billion for 2004.
Collins said in the consumer market, demand will change from standalone products like wireless routers sold by players such as D-Link and Agere Systems Inc., because these products will be integrated into DSL and cable modems, which offer more consumer access than standalone products.
He said while the enterprise market will continue to buy standalone products through 2008, the consumer curve will tail off, beginning in 2006.
“A lot of enterprises have found that wireless LAN has convenience,” said Collins, adding that workers can move around buildings and campuses while enjoying the services.
The move from standalone products to integration into DSL and modem cables will usher in new kinds of alliances and competition for WLAN companies. He explained that WLAN players will compete with DSL and cable-modem vendors and partner with the broadband providers. Companies like Texas Instruments and Broadcom Corp. will sell chips for both WLAN players and DSL and cable modem vendors.
Another trend Collins anticipates is more use of voice over WLAN. Companies such as Cisco Systems Inc., Proxim Inc., Meru Networks, Avaya and Symbol Technologies will lead that charge, Dell’Oro predicts.
In the mobile infrastructure segment, worldwide growth reached 50 percent for the year for wideband CDMA technology. For major technologies, including GSM/GPRS/ EDGE, TDMA, CDMA and W-CDMA, the market surged 10 percent for the year to $3.14 billion, bucking three years of decline.
The report attributes the bulk of growth to W-CDMA buildouts, as well as a lift in GSM/GPRS/EDGE sales in Western Europe and new buildouts in China, India and other developing nations in Africa, Latin America and Asia Pacific.
“The total radio or bearer capacity, as measured in number of voice channels shipped, will skyrocket, increasing by 54 percent in 2004 to 46 million in channels,” said Collins. “However, price declines will offset much of the increase in radio and base station shipments, resulting in muted revenue growth.”
Collins explains that W-CDMA technology has covered 14 percent of the market. “It will continue to grow,” he remarked, adding it “will not take over the market overnight.” He noted that if the figures are viewed year-over-year, the growth will not appear as robust.
In North America, the fuel came from Verizon Wireless when it launched CDMA2000 1x EV-DO service, giving the biggest U.S. carrier a big advantage in providing high-speed data and other multimedia services. Sprint PCS also decided to shift its original plans and pursue a DO launch.
With the Cingular Wireless L.L.C. and AT&T Wireless Services Inc. merger on the horizon, a launch of HSDPA technology, the first phase of W-CDMA, will bring network speeds that exceed DO. But the CDMA players will roll out Revision A of DO, which is comparable with HSDPA. Both technologies will be launched in 2005.
However, Collins said CDMA players have a time-to-market advantage as they will need channel card upgrades unlike HSDPA players, which will need to install new base stations.
In Western Europe, carriers will have extra capacity in their networks once they launch W-CDMA services, which may compel them to increase minutes of use. Their MOU are currently one-third of U.S. carrier MOU figures. This may force European carriers to cut their cost per minute by three times.
“It’s risky to cut prices without assurances of increasing value,” he explained. “They’ll be cautious.”
