Linksys: Top of the WLAN Heap

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Research companies are now starting to report on the numbers for revenue and
unit sales of wireless LAN products for the first quarter of 2003. So far the
worldwide totals are showing low growth in revenue due to the price declines
we’ve come to love and that the companies can’t avoid. But that growth might
have turned into a loss if it hadn’t been for one company: Linksys.

Both Dell’Oro Group and Synergy
Research Group have Linksys pegged as the overall winner for Q1. Dell’Oro’s
1Q03 Quarterly Wireless LAN Report says the provider of home and small business
networking products jumped up 18% from the final quarter of 2002; Synergy’s
Worldwide Market Shares report has the Linksys growth even higher at 26.1%.

With sales according to Synergy for the quarter at $81 million dollars (up
from $64 million during last years holiday season), Linksys not only is the
top SOHO WLAN equipment provider, it’s the number one money maker overall.
It’s even beating enterprise equipment provider Cisco Systems with $68 million in revenue for
the quarter.

This, of course, is great news for Cisco: they are buying Linksys,
an acquisition that should be finalized before the end of the year. Cisco is
still number one in the enterprise market, up from this time last year but down
0.4% from Q4 2002.

“[Linksys’s] aggressive pricing, rebates, and more fueled the great quarter,”
says Aaron Vance, analyst at Synergy. “They were first to market with 802.11g
and were aggressive with pricing.” While the 11g products — based on the
draft for the 802.11g specification — didn’t ship in the same quantities as
the slower but better known 802.11b, he says it helped push the prices on 11b
products down even more.

“If you add [Cisco and Linksys] together, you can see what that acquisition
is going to do to Cisco’s market share. They’ll be on top on the high end, the
low end, and overall,” says Vance.

Other changes for companies according to Synergy’s worldwide numbers include
revenue growth for enterprise vendor Avaya (up 61% to $10.3 million) and 3Com (up
7% to $15.1 million), but a 14% decrease for Enterasys.

On the SOHO side, D-Link had been bolstered
by its final quarter last year, coming within just four-tenths of Linksys’s
21% marketshare, but Linksys shattered that for 2003 so far. Linksys commands
27.9% of the market share revenue, followed by Buffalo Technology at 15.9%,
D-Link at 15.7%, and Netgear at 15%. (A large amount of the SOHO market — almost
20% of the revenue — is taken up by the category of “other” which
Vance says are companies that do not report their sales numbers to the researchers,
such as Microsoft.)

D-Link’s slip in the rank comes with a slip in revenue (down 7.7% to $45.8
million) — though to show how slippery the numbers truly are, Dell’Oro says
the company gained 6%.

In Voice over IP
WLAN products (wireless phones), Synergy says Spectralink continues
to dominate in a field where only it and Symbol Technologies have been players.
Look for that to change by the end of the year as Cisco, NEC, and others
have announced 802.11-based phones.

“I would think Cisco would be competitive out of the gate, but they won’t
shoot into number one,” says Vance. “Spectralink has key relationships
with other vendors… they’ll be the top player in handset for most of 2003.”

You know who’s number one. But who’s the best? And will they always be?

Join us at the 802.11 Planet Conference
& Expo, June 25 – 27, 2003 at the World Trade Center Boston in Boston, MA.

Synergy Research’s Aaron Vance and other analysts will be joining us for a session that examines

The State of the WLAN Equipment Market.