The Commercial Market

WLAN Industry Will Generate $1.67 B in 2003

The wireless LAN (WLAN) industry is experiencing tremendous growth, aided by lower pricing points and standardization of technology. Allied Business Intelligence (ABI) believes that this growth will continue to accelerate, as larger technology and telecommunications companies enter the WLAN industry, bringing deep financial pockets and millions of existing customers.

"The WLAN industry will continue to experience stellar growth as deployments in several key markets take place," predicts Edward A. Rerisi, ABI director of research. "These markets include residential homes, small-medium offices, enterprises, academic campuses, transportation facilities, health care sites, industrial centers and at the local neighborhood eatery. Additionally, 802.11a, 802.11g and dual-band protocols are some of the key catalysts that will accelerate the market adoption of WLAN with its higher speeds of up to 54 Mbps." ABI's research has determined that the overall WLAN industry will generate $1.67 B in total revenue through the end of 2003.

The report, "Wi-Fi Networking Equipment: Worldwide Deployments, Drivers, Players and Forecasts for 802.11x," examines the deployment of WLAN equipment worldwide and provides a realistic outlook on where the industry is headed. This report also covers protocol and standards development, the opportunities and challenges for equipment vendors, and the challenges to deploying WLAN worldwide. Critical analysis of the key equipment vendors worldwide is covered. Market forecasts are segmented by standards .11b, .11a, .11g and dual-band. Detailed examination of technology shifts, market leaders and revenue by world regions through 2008 are also included.

"There is a very elastic relationship between pricing and demand in the wireless LAN market and every step down in price brings the industry closer to unlocking new opportunities and applications," continues Mr. Rerisi. "There is fierce competitive innovation in this market and it is critical for market participants to commit significant resources if they hope to compete."

Manufacturing and Health Care Dominate Bluetooth Vertical Markets

Vertical markets such as health care, government, services, transportation/communications/utilities, manufacturing and mining, and retail will offer a myriad of opportunities for the deployment of Bluetooth, according to In-Stat/MDR.

The high tech market research firm reports that these vertical markets will grow aggressively to over two million deployed Bluetooth nodes worldwide in 2007, and although there is activity in a great variety of applications and vertical markets, health care and manufacturing present the greatest opportunities in the near term.

According to Joyce Putscher, a research director with In-Stat/MDR, "Most applications being considered initially are cable replacement uses, such as accessing machine health, reconfiguring equipment, sensor data, patient information, patient monitoring,

security access, asset tracking and others." The opportunities for replacing cables/wired systems, whether wired or proprietary wireless systems, will be somewhat limited in the long run, but will be faster to realize in the short term. The opportunities for adding new capabilities via wireless will be slower, but present greater prospects in the long run.

In-Stat/MDR also found that:

  • Bluetooth offers advantages in noisy and dusty environments because of its frequency hopping; therefore, Bluetooth is a good fit for the military, manufacturing and mining verticals.
  • Bluetooth is ideal for short distance applications that lend themselves to low power, such as patient monitoring, strip chart recorders, upgrading instrumentation/equipment with serial adapters, machine health/status sensors and a variety of embedded applications yet to be explored.
  • Interest is high in the US for Bluetooth deployment in medical equipment, as over 50 percent of this type of equipment is manufactured in the US. Europe has a high interest in medical equipment as well, especially Italy and Germany, in addition to PC terminal security and patient information.

A Challenging Base Station Market Will Witness Growing 3G Spending

The market for wireless infrastructure has been under constant pressure to adapt to new markets, technologies and changing standards. The base station plays a key role in these cellular networks and is under extreme pricing pressure and market competitiveness. Vendors and suppliers to the wireless base station market are looking for areas of growth with few strategies for relief. Continued lack of visibility haunts the players in this market as they search out the high ground.

There are areas for opportunities in this market with the change in contracts and shifts in network timetables. The 3G equipment market represents the largest sector in terms of revenue growth over other interface technologies. The research firm Allied Business Intelligence (ABI) projects a CAAG of 49 percent for 3G gear spending from 2002 to 2007. This growth rate is slightly down from previous projections, as the market continues to be hesitant.

"This market has been difficult for the past few years, and equipment vendors are looking to make gains in the markets that count," explains Tim Shelton, ABI senior analyst and author of the report update. "Targeting the markets that are going to grow will be key for survivors in this market."

Spending for 3G base station (BTS) equipment will continue to become a larger portion of the whole over the next several years. The percentage of 3G BTS spending in 2007 is projected to grow to greater than 78 percent of the total BTS market.

MEMS Continues its Advance into Optical Networking

Despite the continued downturn in expenditures for telecom components, 2002 was surprisingly strong for suppliers of MEMS (Micro-electro-mechanical systems)-based solutions to the optical networking market, reports In-Stat/MDR. The high tech market research firm attributes much of this to the fact that many of these devices have passed Telcordia standards, giving them real respectability within the market. As a result, a number of companies saw their shipments move beyond sampling and into volume production in 2002.

Even though near-term market conditions will remain tough, the long-term prospects for the communications market remain very strong. As a result, although the market for MEMS in optical networking may be down from previous forecasts, it is by no means out, with revenues seeing a CAGR of 41.8 percent through 2007.

"While device reliability is no longer an issue, company stability is. Fully 50 percent of the companies known to be developing MEMS solutions for optical networking have closed their doors, and the question lingers as to who will be next," says Marlene Bourne, a senior analyst with In-Stat/MDR. Even so, those remaining in the market were still able to raise more than $55 M in venture capital funding throughout 2002.

In-Stat/MDR also found that:

  • In 2002, there was strong movement of 3D switches into the market. Since these switches have a very high price point, their sales generated significant levels of revenue.
  • MEMS suppliers can expect a strong increase in customer demand and design wins in the 2004/2005 timeframe. This will translate into real revenue growth in 2006 and 2007. Up until then, the market is slowly moving forward with increased sampling and unit shipments to a greater number of customers.