No Worries Over Sluggish Growth in 1Q 2014 WLAN Market Report

Six months ago the news was that growth in the wireless LAN (WLAN) market was slowing, with third quarter 2013 (3Q13) increases falling into single digits for the first time in four years. At the time, one enterprise analyst at Infonetics Research considered the drop temporary, saying “WLAN equipment growth fell below the 10 percent mark in the third quarter of 2013, due to the 802.11n transition nearing completion and 802.11ac not yet having a significant effect on the market. Still, we consider this a temporary slowdown and expect growth to reaccelerate in the coming years as buyers focus on their WLAN infrastructure to support the growth of wireless devices and enable BYOD and employee mobility.”

Analysts held steady at the start of 2014 with one forecast from Dell’Oro Group projecting a 45% increase in WLAN market revenue by 2018, topping more than $12 billion. Contributing factors are expected to include the upgrade to 802.11ac, enterprise class infrastructure growth among small and medium size businesses, and the adoption of cloud managed equipment. 

So results from a preliminary report from International Data Corporation’s Quarterly WLAN Tracker may seem confusing, showing even slower growth in the first quarter of 2014 than last fall. The report tracks product type and standard, product class (consumer/enterprise) and location (indoor/outdoor), as well as worldwide geographical sales.

The combined consumer and enterprise market grew just seven percent over 1Q 2013. The enterprise sector far outpaced the consumer market at 10.3% and 3.8% growth respectively. But RohitMehra, VP of Network Infrastructure at IDC, doesn’t seem concerned, indicating the refresh and upgrade cycle just hasn’t kicked into high gear yet. “WLAN infrastructure continues to be a bright spot in the networking market, with mobility and cloud driving investments and refresh cycles across geographies and verticals. While a stabilizing growth rate suggests the market maturing, new vertical-specific use cases and the ramping adoption of the emerging 802.11ac standard will fuel sustained growth in the enterprise WLAN market for the foreseeable future."

Particularly important in this optimistic outlook is the adoption of mobile devices, cloud driven devices and storage worldwide.  Latin America surged ahead in 1Q14 with 33% growth in the enterprise WLAN sector and the combined Europe, Middle East, Africa regions still boasted a healthy 12% year over year increase.

A few enterprise vendor highlights from the report include:

• Cisco cites normal seasonal fluctuations for a quarter over quarter decline of -11.6% and flat year over year figures. Cisco's worldwide market share holds strong at 47%, just down from 48.4% in 4Q13 and 52.8% in 1Q13.
• Aruba had a very strong quarter in 1Q14 and revenue increased 25.4% year over year and 8.4% sequentially on strength across its product portfolio, including the 802.11ac and Aruba Instant access points.
• Ruckus outperformed the overall enterprise WLAN market with36.4% year over year growth and 4.1% quarter over quarter in 1Q14. Ruckus now accounts for 6.7% of the overall market.
• HP's 1Q14 revenue underperformed, decreasing -10.5% year over year and falling below $50 million for the quarter. Their market share dropped to 4.4% from 5.4% last quarter.