802.11ac WLAN Sales Poised To Surge

Sales of enterprise-grade wireless LAN equipment with the new 802.11ac WiFi standard are expected to skyrocket over the next four years, partly due to flattening prices, according to a report from Dell'Oro Group.

The research firm expects enterprise WLAN sales revenue to reach $6.7 billion in 2018, 70% more than 2013 sales. The WLAN market as a whole will reach $12.2 billion over the same time period, according to Dell'Oro. Besides fast adoption of 802.11ac, Dell’Oro also points to fast growth of cloud-managed WLAN systems for the robust sales forecast.

Each successive generation of the 802.11 standard for sending wireless signals has been faster than the previous generation, and typically more expensive, Chris DePuy, an analyst and a vice president at Dell’Oro, tells Network Computing. For example, when 802.11n replaced 802.11 a/g the price premium was doubled.

But as vendors are releasing new equipment built to the 802.11ac standard to replace the previous 802.11n standard, “there’s very little, if any, price premium," says DePuy.

“It’s a very different kind of pricing strategy and, in terms of the wireless LAN market, we’ve never seen this type of behavior before. It’s totally new.”

Dell’Oro surmises that vendors are holding the line on pricing to spur faster adoption of 802.11ac, and it seems to be having that effect. Dell’Oro’s forecast shows that 23% of WLAN equipment sales in 2014 will be 802.11ac devices; at this same point in the sales cycle for 802.11n devices, they accounted for only 11% of WLAN sales.

“It’s rolling out faster,” says DePuy of 802.11ac.

The enterprise WLAN market consists of large businesses and service providers, such as cellular phone companies. Other segments of the total $12 billion market are the outdoor market, which DePuy says is quite small, and the single office-home office (SOHO) market of individuals who purchase their own WiFi access points for their homes, or service providers who ship WiFi devices to the homes of subscribers who pay for monthly Internet or TV service.

The first 802.11ac devices shipping are part of what is called Wave 1 of the technology, according to DePuy. Wave2 devices will begin shipping next year that will have many new features, including multi-user MIMO. The MIMO standard -- or multiple-input/multiple-output -- means that various signals can stream into and out of an access point. The added multiple user feature means that multiple devices can send multiple signals into and out of one access point.

“It comes down to smaller, cheaper, faster,” DePuy tells us.

The Dell’Oro report, released July 23, is a forecast of sales and not a record of present sales or vendor market share. However, the market leader in the WLAN market as of the first quarter of 2014, according to Dell’Oro, was Cisco Systems, with a 50.2% share, followed by Aruba Networks at 12.2% and Ruckus Wireless at 6.9%.