Cisco Acquisition Broadens Wireless LAN Portfolio

Cisco Systems expanded its wireless LAN portfolio late Wednesday when it revealed plans to buy wireless LAN switch vendor Airespace Inc. for $450 million in stock. The deal gives weight to a wireless LAN architecture, advanced by Airespace and other Cisco competitors, that uses switches to centrally control and manage so-called "thin" wireless-access points.

Cisco's market-leading Aironet wireless LAN product line and its structured wireless-aware network architecture are designed for very large networks. They use intelligent, or "fat," wireless-access points that are integrated into a wired network and include a host of features and functions. Wireless LANs that use centralized switches usually are installed as overlay networks and generally aren't as tightly integrated with a company's wired network.

"The switched architecture is best for deployments that range from 10 to 250 access points, which is where most businesses are at today," says Abner Germanow, a research manager at IDC. "The Airespace system is very well-suited to that type of customer."

Businesses worldwide spent around $850 million on wireless LANs last year, and the market is growing at around 65% annually, Germanow says. Cisco owns around 55% of the market, followed by Symbol Technologies (8.3%), 3Com (7%), Proxim (7%), and Airespace (6%), according to IDC.

By buying Airespace, Cisco gains a product line that includes wireless LAN controllers, or switches; access points' wireless LAN management and location software; and security capabilities such as intrusion detection. In the short term, Cisco plans to offer the Airespace product line alongside its other products. Over the long term, company officials say they plan to converge and integrate the two product lines, although they couldn't provide details on what the ultimate product line or architecture would look like.