Wi-Fi market surges on consumer sales

By Richard Shim
Posted on ZDNet News: Feb 11, 2004 12:17:00 AM

The Wi-Fi gear market continued its rapid growth in 2003, led mostly by consumer holiday sales, but companies saw a slight shuffle in their market share rankings.

The overall revenue for Wi-Fi wireless networking gear was up more than 55 percent in the fourth quarter to $751.9 million, Synergy Research Group said in a report Tuesday. Revenue was up about 40 percent, to $2.5 billion, for the year.

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The consumer sector drove the overall market, increasing about 74 percent in the fourth quarter to $517.6 million and up 66 percent to $1.6 billion for the year. The enterprise, or large-business, segment also was up significantly--about 26 percent to $234.3 million for the quarter and about 9 percent to $869.7 million for the year.

The consumer market has largely driven Wi-Fi sales growth for several quarters. The enterprise market has been slower to install wireless networks because of security and cost concerns. Still, there are indications that large businesses are beginning to use more Wi-Fi equipment.

The fourth quarter is generally a slower selling period for the corporate segment, while it is a prime time for consumers because of holiday deals, said Aaron Vance, an analyst with Synergy Research.

"The consumer space was driven by price during the holiday season, and 802.11g products were the big attraction," Vance said.

802.11g is the latest Wi-Fi standard that allows data to be transmitted wirelessly. The maximum transfer speed is 54 megabits per second, but actual throughput is around half that.

The market share rankings of the top three companies in the consumer segment changed in 2003. NetGear replaced Buffalo Technology for the third spot. Linksys maintained its top spot with 22.3 percent of the market, and D-Link Systems remained No. 2 with 17.9 percent. Linksys is a division of Cisco Systems.

"Buffalo struggled as competitors moved into their market," Vance said. "They had more or less a monopoly in the Asia-Pacific region. But D-Link and NetGear made major moves there, and Linksys is now turning its attention there. It's only going to be tougher for regionally strong makers."

Market rankings also were swapped in the enterprise sector, but only for the quarter. 3Com took the third spot in market share from Proxim for the quarter, but Proxim remained No. 3 for the year.

Cisco held the top market share spot with 36.2 percent of the market, and Symbol Technologies remained No. 2 with 15.5 percent of the market.