The prospects are healthy for vendors of WLAN equipment. By 2006 the global enterprise WLAN market is expected to be worth over $1.3 billion, double its value of approximately $650 million in 2002. Datamonitor’s Tim Gower argues that revenue opportunities will diversify as deployments move beyond the traditional markets of retail and manufacturing to new verticals such as professional services…
Wireless LANs (WLANs) deployed within enterprise locations enable laptop or PDA-carrying employees to access corporate network resources. The primary advantage is the improvements in employee productivity that ubiquitous network coverage within the enterprise can provide. Many employees spend significant periods of time away from their desks, whether in meetings, on the factory floor, or simply away from the corporate environment. By providing connection to the enterprise network via a WLAN, employees are able to remain connected when not at their desks.
The education and healthcare sectors in particular are likely to experience significant traction. Schools and universities will continue to deploy WLANs as a classroom teaching tool and to improve communication for staff and students. Hospitals will equip doctors with WLAN-enabled devices to improve levels of patient care. Strong uptake is also expected in vertical markets such as financial and professional services, with IT managers appreciating the technology’s productivity benefits.
Further drivers for the technology include its return on investment (ROI), the networking needs at greenfield sites, the reduced costs associated with office adds, moves and changes, the reduction in voice costs through voice over WLANs, increasing familiarity with WLAN outside the enterprise and the decreasing price of WLAN-enabled laptops.
North America will continue as the most lucrative region
North America, the largest regional market for enterprise WLAN infrastructure, will continue to generate the highest revenues for vendors in the coming years. It has been at the forefront of WLAN innovation in the past and the technology’s penetration into the enterprise will continue to increase in the coming months. Enterprise IT managers in this region are typically the first to deploy newly ratified WLAN standards and public awareness of the technology is also increasing significantly following the roll-out of a high number of public wireless LAN (PWLAN) locations.
EMEA (Europe, the Middle East and Africa) is approximately one year to eighteen months behind North American with regards to the deployment of the latest WLAN technology. However, EMEA has certainly caught up a lot of ground with North America in recent months as the appeal of the technology has broadened. At the turn of the decade, Datamonitor estimates that EMEA constituted around 12% of global enterprise WLAN infrastructure revenues, while in 2002 this figure increased to 29%.
The strongest regional growth in the coming years is forecast to come from Asia Pacific. There has been a considerable amount of enterprise WLAN uptake in recent months in Japan and South Korea and the PWLAN market is also very advanced. Perhaps notably, price pressures in Asia Pacific have been high and consequently WLAN equipment is actually relatively better value for enterprise IT managers in comparison to their counterparts in North America and EMEA. In addition, enterprises in Asia Pacific tend to worry far less about security meaning that the overall impact of barriers to WLAN adoption is reduced.
Market inhibitors’ influence will subside over time
The primary market inhibitors are concerns regarding security, confusion regarding standards and their ratification, a lack of market education, a low penetration of WLAN-enabled devices, and complexities relating to network management. However, their influence, which has prompted enterprises to exclude or postpone potential investments in WLAN, will subside in the coming months.
For example, new security standards such as the Advanced Encryption Standard (AES) will improve the perception of WLAN security, further 802.11 standards will be ratified and vendors will continue to bring WLAN switches to market that will ease network management complexities. Importantly, the proportion of laptops shipped with WLAN functionality embedded will increase dramatically, thus the low penetration of WLAN-enabled devices becomes far less of an issue.
With WLAN adoption in enterprises increasing, there is a marked opportunity for network equipment vendors, though levels of competition will be high. Those vendors that effectively position the various WLAN standards, ease enterprises’ migration strategies through product developments, and develop effective security and network management solutions will have a clear advantage.