It's never easy to mark generational shifts in technology, but it's important to understand WLAN evolution because each successive generation addresses fundamental architectural limitations of the products that came before.
We think in terms of three distinct eras. Early WLANs, both proprietary and 802.11, were sold primarily into vertical markets like retail, supply chain, health care, manufacturing and education. These WLANs were expensive and, by today's standards, feature-limited. Because the applications didn't require substantial bandwidth, the design goal was to maximize the coverage area of each access point. The number of APs and clients was limited, so management was simple. Some of these legacy systems have been upgraded, and many more will require overhauls in coming years as vendors gradually announce many components' end of life.
Second-generation enterprise WLANs supported newer access protocols (802.11a, b and g) on more powerful APs and provided significant functional improvements over first-generation offerings, at a lower cost. But inherent architectural deficiencies prompted the emergence of third-party tools for site design (Ekahau and Wireless Valley, now owned by Motorola) and management (AirWave and Wavelink), as well as security gateways (Bluesocket and AirFortress) and wireless IDSs (AirDefense and AirMagnet).
Third-generation enterprise WLANs are best represented by the Big 3 start-ups--Airespace, Aruba and Trapeze--all of which made market splashes in 2003. Their architectures applied client-server distributed processing principles to wireless LANs, combining so-called "thin" APs and centralized controllers glued together with proprietary protocols that effectively locked customers into using APs and controllers from a single vendor. Initial product offerings were creative but complex, often requiring that APs attach directly to controllers (then called wireless switches) installed at the network edge. By 2004, version 2.x offerings addressed many of the performance, reliabilty, security, integration and management deficiencies plaguing initial products. Cisco took significant steps to add controller capabilities to its highly successful Aironet wireless offerings, while established wireless competitors, like Bluesocket and Colubris, enhanced their systems to compete with the Big 3.