New protocol helps boost Wi-Fi sales

The market for IEEE 802.11 wireless Lan equipment continued to grow in the second quarter, driven in part by users embracing the...

The market for IEEE 802.11 wireless Lan equipment continued to grow in the second quarter, driven in part by users embracing the recently standardised 802.11g technology.

Worldwide unit shipments of 802.11 equipment, also known as Wi-Fi, grew 6% from the first quarter, though falling prices limited revenue growth to 2%, according to Greg Collins, analyst at Dell'Oro Group, which compiled the quarterly figures. Compared with the second quarter of last year, revenue was up 10% while 69% more units were shipped, Collins said.

The market as a whole generated revenue of $419m (£260m) in the quarter, the market research company said.

Revenue from 802.11g products grew 48% sequentially and made up 24% of total market revenue. Standard 802.11g products are compatible with the existing 802.11b standard but have a theoretical maximum carrying capacity about five times that of the earlier products.

The Institute of Electrical and Electronics Engineers approved the 802.11g standard in June, but some suppliers had began shipping products based on draft versions of the standard around the beginning of the year.

In terms of the number of units shipped, 802.11g products made up 23% and 802.11b was 76%. Revenue from sales of 802.11b products are shrinking along with declining prices, which fell about 10% in the second quarter, according to Dell'Oro.

Dual-band products, which also support the 802.11a standard, made up most of the remaining 1% of volume shipments. Products that support only 802.11a now make up a small niche market, Collins said. Like 802.11g, the 802.11a technology has a maximum data rate of 54mbps, but it uses different radio frequencies.

Dual-band unit shipments were roughly flat and revenue was down slightly from the first quarter, he added. However, Collins expected dual-band sales to start picking up next year as prices fall to approach what customers pay for 802.11g equipment today.

Cisco Systems led the market with 17% of total revenue, coming in just ahead of Melco's Buffalo brand, which had 15%. Linksys Group which was acquired by Cisco in June, would have led the market in revenue but pushed back its revenue reporting after it switched to Cisco's procedures, Collins said.

Linksys recognises revenue when a product is sold into the channel that will resell it to end customers, whereas Cisco only recognises revenue when the end-user buys the product, Collins said. He sees Cisco holding more than one-third of the market once Linksys revenue reporting catches up later this year.

Stephen Lawson writes for IDG News Service

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