Wireless LAN sales surge as prices plummet

Sales of wireless LAN equipment soared in 2002 -- with shipments more than doubling over 2001 figures -- spurred by falling prices; higher demand for mobile computing; and better interoperability becauses of work on standards.

Research firm Gartner said worldwide wireless LAN equipment shipments totalled 19.5 million units in 2002, a 120 percent increase on the 8.9 million units shipped in 2001. The falling prices meant that revenue for wireless LAN equipment increased by just 29 percent.

Cisco is the only company that saw sales drop over the period -- from $324m in 2001 to $303m in 2002. Its market share also fell, from 19 percent in 2001 to 14 percent in 2002. But this decline is offset by its acquisition of Linksys, the company that has taken over the number one position with sales of $306m -- a 147 increase on its 2001 revenues of $142m.

Buying Linksys gives the networking company a foothold in the consumer/SoHo market, operating as a division that will continue to sell Cisco's products under the Linksys brand name.

The acquisition, which is now complete, gives the combined company a clear lead over nearest competitor Buffalo Technology, which had $200m worth of sales in 2002, with 9.2 percent of the market. In fourth place is D-Link with $174m in revenues giving it an 8 percent market share, and in fifth place lies Proxim, with $172m of revenue.

Wireless LAN sales are likely to continue growing fast, said Gartner, but interoperability will remain one of the keys. "The market requires multi-vendor compatibility, since wireless LAN adapters are being increasingly integrated into new mobile PCs," said Andy Rolfe, principal analyst for Gartner's worldwide telecommunications and networking group, in a statement.

But he warned against buyers settling for products based on incomplete security standards, saying they should instead "employ standard wireless LAN networks and provide security at higher layers."

The lack of a security standard has been one of the chief obstacles in the adoption of wireless networking technology within the business and teleworking market. In May, the Wi-Fi Alliance announced the certification of products using the latest security specification, Wi-Fi Protected Access (WPA) -- the third such specification to receive certification for interoperability from the Alliance, which means that approved products are supposed to work with each other no matter which company manufactured the product.

In the longer term, the Institute of Electrical and Electronics Engineers has been working to develop and approve 802.11i, a security standard that won't be finished for at least another year. WPA is a subset of what will become the 802.11i standard and replaces the existing security protocol, called Wired Equivalent Privacy.

For an explanation of different wireless LAN standards, see ZDNet UK's Wireless roadmap and A to Z of wireless standards.

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