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The fourth quarter saw the first products using the new 802.11a standard, which offers higher performance than the earlier 802.11b. Wireless pioneer Proxim and SMC Networks each introduced 802.11a products, said Dell'Oro analyst Greg Collins.
However, the new technology accounted for less than 1% of total revenue for the market of wireless LANs that use the IEEE 802.11b and 802.11a standards.
Total revenue for the wireless LAN market reached $363.3m (£254.3m). Cisco Systems, which holds 20% of the overall market and 45% of the market's enterprise equipment segment, saw already its revenue grow by 8%.
Low-price equipment makers Buffalo Technology, Linksys and D-Link saw gains of 36%, 28% and 44% respectively.
Home LAN users are rapidly adopting 802.11b wireless LANs as lower cost equipment comes on the market, said Collins. Revenue of network access points (hubs through which clients on the LAN communicate) for small offices and homes grew 40 percent in the quarter, compared to 12 percent growth for enterprise-class hubs, Collins said. Revenue of client modules grew 15 percent.
Business demand for the wireless LANs was strongest in specific industry segments, such as health care, manufacturing and retail, where mobility offers new capabilities. For example, some retailers are using 802.11b-equipped barcode scanners to keep track of inventory, Collins said.
General enterprise adoption still is in an early stage as companies try to figure out how a wireless LAN can help their employees work.
Experimentation with wireless LANs in enterprises in some cases is being held back by the weak economy, he added.
"I think they're interested in it, but their ability to experiment is limited because they don't have the funds," Collins said. "A lot of the IT managers we've talked to have their budgets in maintenance mode," he added.
Concerns about the ease of intrusion into 802.11-based wireless LANs are not significantly hampering demand, Collins said. Enterprises are taking advantage of added security features built into higher end equipment, and home users are not as concerned about security for their applications.