WLAN Market Was Red Hot In 2004: Report

The worldwide wireless local area network (WLAN) equipment market was red-hot in 2004, according to new research from Infonetics, with 36.1 million units shipped, up 51% over 2003.

WLAN equipment revenues hit $2.8 billion in 2004, representing only a 15% increase over 2003, and revenues dropped 21% to $619.4 million in the last quarter. Infonetics attributes this revenue drop to price erosion in a fiercely competitive market, and expects the trend to continue for several years. At the same time, however, the firm is confident that WLAN equipment sales will continue to grow strongly, expecting 80.4 million units to ship by 2008 up 123% over 2004.

Consumer spending on WLAN equipment, which Infonetics describes as "explosive," was one of the main drivers for the growth. Consumers and small businesses accounted for 52% of revenues, with service provider and enterprise spending make up 48%.In addition, almost half of revenues from WLAN equipment sales come from North America, with Europe, the Middle East and Africa in second place with about a quarter of the market.

According to Infonetics directing analyst Richard Webb, the growth numbers indicate a mainstreaming of WLAN technology. "Competition has increased, driving prices down and spurring on further innovation in the market as wireless LANs continue to gain acceptance," he said in a statement. "The range of applications for wireless LANs is increasing, and we see VoWLAN (voice over IP over wireless LANs) and RFID tagging in particular as two of the key applications driving the next phase of growth through 2005 and beyond."

Cisco is the worldwide leader in WLAN equipment sales, with its Linksys subsidiary in a close second place. Taken together, the two companies command 32% of the market, with D-Link in third and Netgear in fourth place.