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Survivor's Guide to 2007: Mobile and Wireless: Page 3 of 8

Trapeze has leveraged key partnerships, especially with Nortel and 3Com, to carve out a strong position, primarily as an OEM provider. Meru has garnered some attention, especially in the education market but also through partnerships with Foundry and Avaya. Its unique architecture addresses many of the major shortcomings of mainstream product offerings, particularly for Vo-Fi (VoIP over Wi-Fi), but how it accomplishes its magic is still a closely guarded secret. Bluesocket, Colubris, Extreme Networks, Hewlett-Packard and Siemens have enjoyed some success by targeting specific vertical or geographic markets, leveraging leadership positions in certain areas or maintaining the loyalty of an installed customer base.

Although the market is growing, the pace is slow, up about 10 percent year over year, based on the most current market numbers. Clearly, the forecasted explosive market growth has not materialized There are several reasons for this, but mostly, it's the result of two somewhat contradictory trends. First, while standards for security and QoS have finally materialized, adoption has been slow, both in terms of vendors adding these capabilities to products and among IT managers responsible for enabling new network services. Subtle client/device incompatibilities still dog the industry, and back-end integration challenges are substantial.

There's also the problem of investment protection. With a new breakthrough technology like 802.11n about to hit the market, nobody wants to make big investments in yesterday's standards unless they can deliver substantial short-term ROI. Upgrading to 802.11n won't be trivial so it's rational to hold off. We're still bullish on long-term prospects, and we still feel confident that Wi-Fi's role will become ever more critical.

Today, Wi-Fi is primarily a convenience, providing the same app services as Ethernet, but without a wire. But there's no killer app to speak of. Vo-Fi may emerge as the one--in fact, the impending growth of dual-mode cellular/Vo-Fi products is the most interesting development we'll track during 2007.