Cisco aims for wireless dominance
At a media briefing at company headquarters Thursday, Cisco executives detailed its strategy for wireless networking kits, technology that allows people with laptops to roam around the house or office and still surf the Web. The networking kits wirelessly link laptops and computers, so they can share an Internet connection and peripherals such as printers.
Cisco competes against 3Com, Intel, Proxim, Lucent Technologies' spinoff Agere Systems and others in the emerging wireless networking market that is expected to grow from $1.2 billion in revenue last year to $4.6 billion by 2005, according to a study by analyst firm Cahners In-Stat Group.
In the market for wireless products that use the 802.11b or Wi-Fi standard, Cisco leads the market with about 30 percent market share, followed by Agere with a market share of between 20 percent to 25 percent, the study shows. Other rivals are in the single digits.
Cisco Chief Strategy Officer Mike Volpi said Thursday he believes the company can increase its market share to 40 percent to 70 percent in the coming years.
While most buyers of wireless networking equipment are businesses and universities, Cisco executives say they have begun signing deals to build wireless Internet connections at airports such as JFK International and LaGuardia in New York, and at cafes such as Starbucks.
Cisco expects to strike more deals with airports and cafes soon. In about 12 months, Cisco plans to partner with airlines and railway lines so the company can install wireless networks in airplanes and trains, allowing people to connect to the Web while they commute, said Charles Giancarlo, senior vice president of Cisco's commercial and consumer lines of business. Laptop users on airplanes could stay connected to the Net through satellites, for example, he said.
Cisco will target the consumer market by having third-parties sell the product for the company, such as Internet service providers, Volpi said. Cisco will not make its wireless networking kits available in retail stores.
Wireless networking is one of many high-growth areas Cisco is tackling, including Internet telephony, optical networking and networking hardware that speeds content over the Web. Even though overall company revenues were down last quarter because of the economic slowdown, Cisco executives said wireless sales were up.
Like it has in other product areas, Cisco bought its way into the wireless market. Through its 1999 Aironet Wireless Communications acquisition, the company sells Wi-Fi products that run at 11 megabits per second. In the future, the company plans to sell faster speed networking kits that use the 802.11a standard that runs at 54 megabits per second. Cisco bought 802.11a chipmaker Radiata last year.
Cisco's current wireless networking kits includes wireless PC cards that have radio transmitters and receivers built in and a wireless device, called an access point, that connects the wireless technology to a regular Internet connection.
Cisco executives on Thursday touted its networking equipment that allows telecommunications service providers or property owners to wire apartments, hotels and offices with high-speed Net access.
The equipment will allow service providers or property owners to offer tenants high-speed Net access, the ability to make phone calls over the Net, and video-on-demand services. Cisco competes against 3Com, Tut Systems and others in the emerging market that is expected to reach $2 billion in revenue by 2002, according to Cahners.