Firm predicts solid growth for Canadian WLAN market

During a time when business leaders are clutching tightly to their purse strings, there appears to be hope for the wireless LAN (WLAN) market, according to Toronto-based research firm IDC Canada Ltd.

In a detailed report released this week entitled Hot Off the Wire: Canadian Wireless LAN and Hotspot Market Forecast, 2003-2007, IDC said 31 per cent of enterprise companies and 18 per cent of midsized businesses are currently using WLAN technology in Canada. The numbers signify a three per cent increase over last year’s WLAN usage.

These findings represent significant opportunity for WLAN equipment vendors including the likes of San Jose’s Cisco Systems Inc. and Brampton, Ont.’s Nortel Networks Inc., the study said. Over the course of this year, equipment revenue is expected to increase by almost 20 per cent to $82.8 million and is forecasted to grow to $126.8 million by 2007.

However, the study also found that WLAN equipment vendors aren’t the only players that can reap the benefits of the fervent market. While incumbent local exchange carriers (ILECs) have typically “lagged behind equipment vendors in pursuing the WLAN market,” Canadian ILECs Bell Canada and Telus Corp. have been testing the market over the past six months. Bell began offering end-to-end turnkey WLAN solutions for the enterprise late last year and Telus has made a play for both enterprise and small and medium businesses (SMBs) with its managed WLAN services.

IDC Canada attributed the market growth to a change in the business perception of WLAN technology, explaining that “WLAN has been embraced as a serious enterprise service and is no longer…a high-tech hobbyists’ pastime.”

Still, according to the report, although consumer Wi-Fi use for home wireless networking is expected to grow at twice the rate of the business segment, another area of the market will take the cake in terms of propelling wireless technology.

“The segment that will produce the most explosive growth in WLAN equipment sales is the public access, or hotspot market,” the report stated, noting that WLAN equipment sales into hotspots is predicted to grow by a whopping 141 per cent per year-over-year for the next five years. This means big money for hotspot equipment vendors – bringing sales from less than $1 million currently to more than $5 million in 2007.

In order to turn these predictions into realities the IDC report offered Canadian wireless technology vendors some “essential guidance.”

“Equipment vendors should position WLAN as a logical extension of the enterprise network,” the report said. “WLAN fits well with (Internet Protocol) and mobility initiatives many Canadian businesses are undertaking. For the home and small business markets, WLAN is best presented as a cheap and flexible alternative to cable-based networking.”

IDC Canada added that while hotspots have the potential to become profitable value-adds, wireless carriers will have to do a good job in designing market entry strategies and position Wi-Fi in such a manner as to complement other wireless services.

The report was compiled by IDC Canada’s Lawrence Surtees, Director of Telecom Research and Warren Chaisatien, senior telecom analyst. For more information visit www.idc.ca.



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