Wireless Lan products based on draft versions of a new, faster standard helped drive up worldwide unit shipments and revenue in the first quarter of this year, according to market research company Dell'Oro Group.
The IEEE 802.11g standard, which is expected to be ratified by August, allows for a carrying capacity of 54Mbps (bits per second) on Wlans that occupy the same 2.4GHz radio spectrum used by existing 802.11b Wlans. It is intended to be backward compatible with 802.11b.
Many suppliers began shipping prestandard 802.11g products early this year with the intention of making software upgrades available when the standard is finished.
The popularity of 802.11g products, which are only slightly more expensive than 802.11b, helped push Wlan equipment revenue up 1% from the fourth quarter to $411m, according to Dell'Oro analyst Greg Collins.
The new products are selling briskly in the small office-home office (SoHo) market, where Wlan growth is strongest, he added.
The 802.11g products accounted for 29% of access points and broadband gateways sold in the SoHo market, Dell'Oro said. Collins added that this share would continue to grow over the course of this year.
"When people go in to the store and see a higher performance product for not much more money, they are likely go and choose G over B," he said.
Unit shipments of Wlan gear grew 6% from the previous quarter, but continuing price declines reduced the gain in revenue.
Compared with the first quarter of 2002, revenue was up about 17%, from $352m, and unit shipments soared to 4.8 million from 2.6 million, including network interface cards as well as access points and gateways.
While Wlan sales have been growing strongly in the SoHo market, driven by falling prices, they have been flat for about two years in large enterprises, Collins said.
Concerns about the security of Wlans and which standard to choose have caused many enterprises to hold off on the technology. Economic woes also have put new technologies on the back burner, he added.
The recent advent of WPA (Wi-Fi Protected Access), a new security specification that is stronger than the WEP (Wired Equivalent Privacy) technology already built into the 802.11 standard, should help wireless catch on in corporations, he said.
Dell'Oro predicted enterprise sales would pick up in 2004.
The relative weakness of the enterprise Wlan market also has affected supplier market share, Collins said. Linksys Group, a maker of SoHo-oriented network gear, overtook Cisco Systems last year as the biggest supplier by revenue in Wlan equipment.
In the first quarter, Linksys showed a gain of 18% from the previous quarter. Cisco came in second place with roughly flat revenue.
Earlier this year Cisco agreed to acquire Linksys for about $500m in stock.