The Truth About Wireless LAN Sales

With so many public companies in the tech sector turning in lousy financial reports, it's difficult to believe any technology could be showing sales growth. Yet, time after time when I speak with wireless LAN (WLAN) vendors, they insist their market is thriving. If you're like me, you're asking yourself how that can be true. Worry not, there is a key to understanding this conundrum. While some companies offer WLAN products exclusively, most other vendors' WLAN sales come from a separate, specific division. This means that a company's overall sales may be down, while sales from its WLAN division are up.

Growing Opportunities
Allan Scott, business manager for the Americas, Agere ORiNOCO, told me WLAN sales have been growing for the Allentown, PA-based vendor. He added that the retail sector is finding new uses for wireless technology on a regular basis. MSC, an Internet service provider, has installed WLANs in eight shopping centers in Florida. Customers can use the WLANs to search for specific items. MSC charges mall tenants a fee for using the network. Sales opportunities are also abundant in the consumer, SOHO (small office/home office), and large distributor markets.

The Stats Say...
According to an August 3, 2001, report by Gartner Dataquest, the worldwide market for WLAN equipment intended for PC connectivity will be worth slightly less than $1.4 billion in 2001. Gartner expects the market to grow in the United States to $3.8 billion in 2006, with a 22% CAGR (compound annual growth rate). This forecast includes WLAN adapters for PCs and WLAN access points.

Gartner also said annual shipments of WLAN adapters will reach 40.3 million units by 2006, about half of which are expected to ship with new portable PCs. Slightly less than one in two professional portable PCs will be equipped with a WLAN adapter by 2006. WLAN access is also expected to become a significant connectivity option for high-end personal digital assistants (PDAs) toward the end of the forecast period. Access point shipments will grow from less than 0.9 million in 2001 to more than 8.4 million in 2006. The home market segment for WLAN equipment is forecast to be worth more than $785 million by 2006.

Wireless Goes To College
Like Agere, Avaya Communications (Concord, MA) is a spinoff from Lucent Technologies. Through an OEM agreement with Agere, Avaya uses its brand name on Agere's wireless LAN hardware. Graham Celine, VP of solutions management for Avaya's MultiService Networking Infrastructure Solutions group, agrees with Scott: the WLAN market is holding its own in a tight economy.

"Avaya markets WLAN technology to the entire enterprise," said Celine. "In our definition, the enterprise includes all markets: offices (small and large), warehouses, hotels, and more. Our key focus is on the healthcare, retail, and education markets. We recently installed a campus-wide WLAN system at Buena Vista University (BVU) in Storm Lake, IA."

The BVU installation covered a 60-acre campus. Indoors or out, students have wireless access to all university information assets and the Internet. Students can sit under a tree on the campus and access white papers in the school library.

The Value Of The VAR
Both Scott and Celine stressed the value of VARs and systems integrators in promoting WLAN sales. Celine told me, "Sixty percent of our sales are derived from the indirect channel. The value-added services it provides are extremely important to customers. Even when we make a direct sale, we often solicit the help of an integrator for the installation." Scott added, "VARs and integrators are more established in the marketplace than vendors. There are resellers all around the world, and they reach customers that are unavailable to vendors."

There is no real evidence that the WLAN market is feeling the negative effect of the economy to the degree many other technologies are. The tragic events of September 11 have temporarily slowed sales across all sectors. But, most analysts I speak with believe sales that were strong prior to September 11 will return to their previous levels rather quickly. The WLAN market appears to be a safe bet for VARs who want to grow their bottom lines.