Wireless networking a bright spot for Cisco

PALO ALTO, Calif. (Reuters) -- While overall sales at Cisco Systems Inc. declined in its recently-completed third quarter, there were some bright spots, among them increasing sales of gear to power wireless networks -- a fast-growing area that the world's biggest maker of data-networking gear is honing in on.

"Our wireless sales are increasing," Charlie Giancarlo, who heads Cisco's commercial and consumer group, told reporters during a briefing at the company's San Jose, Calif. Headquarters on Thursday.

The market for wireless local-area networking, or wireless LAN equipment, is a relatively new one for Cisco. Its November, 1999 acquisition of Aironet gave it the initial technology it needed and it has subsequently added to it, rolling out wireless base stations and the network cards needed to link laptop personal computers to a wireless network.

Cisco's efforts appear to have paid off: The company now holds a 31 percent share of the market for access points, or base stations, according to market researcher Dell'Oro group. In network cards -- the credit-card-sized devices that slip into laptop PCs -- its share is 29 percent. In both areas, it has as much market share or more than any other competitor.

Cisco is now aiming for a market share of 40 percent to 70 percent as soon as possible, said Cisco's Chief Strategy Officer Mike Volpi, declining to be more specific.

What's making this possible, not just for Cisco but for other networking players, is a wireless communications standard known as 802.11b that has emerged for devices to talk to each other across a network. Without it, there would be too many different proprietary standards, making a rapidly growing market exceedingly difficult, Cisco executives said.

The size of the 802.11b market, while comparatively small at $800 million in 1999, it's forecast to swell to $2.7 billion by 2003, according to market researcher Cahners In-Stat.

Although big companies, such as Microsoft Corp., Cisco and others will help drive this market to the multibillion-dollar level, another seemingly less likely group of institutions is helping the wireless network market get off the ground: universities.

More and more universities are rolling out wireless networks, letting students log onto campus networks, access the Internet, download lectures, texts and the like from classrooms, dormitories and even from outside spaces on campus or cafes.

Microsoft, for example, is setting up a wireless LAN at its Redmond, Wash. Headquarters and already has 3,000 access points installed on the Redmond campus and in branch offices outside the regions. Fully 7,000 workers are now using wireless LAN cards in their laptops, and that's slated to increase to 25,000 by the end of the year, Giancarlo said.

And in addition to the increasing deployments of wireless LANs at universities or big businesses, before much longer wireless home networks will start to take off, the Cisco executives said.

Yet so far, the home wireless networking market hasn't taken off as quickly as analysts and companies had earlier predicted.

"We've all seen projections that have come and gone," Giancarlo said, who has installed a wireless home network in his house so that he, his wife and two daughters can all get on the Internet, work and do e-mail from pretty much anywhere in the home -- without having to be tied to a cable that runs into a laptop or a PC.

"Instead of being alone in separate rooms, we can now be alone together," Giancarlo joked.