WLAN: Up the Popularity Chart

The year 2004-05 was a watershed year for the WLAN equipment market in India.
In many ways wireless entered the main

stream with both enterprise and SOHO/home users. According to VOICE&DATA
estimates, the Indian WLAN equipment market was valued at Rs. 82.5 crore in
2004-05, as against Rs. 51.5 crore in 2003-04.

However, it could not register the kind of growth that it had achieved in
2003-04 in terms of value as equipment prices dropped substantially.

Although
a number of factors got together to drive upward, the movement in the WLAN
equipment market in 2004-05, the most significant was the drop in equipment
prices. The per user cost of deploying WLAN in enterprises slipped by around 50
per cent in 2004-05. This was complimented by the fall in price of laptops and
Internet bandwidth, and the expansion of network connectivity. The availability
of other Wi-Fi enabled gadgets like PDAs and phones also aided the adoption of
WLAN.

The market also benefited from the developments on the regulatory front. The
government completely delicensed the 2.4 GHz band for indoor use of low power
applications and technologies. The use of low power indoor systems in 5.15 —
5.35 GHz and 5.725—5.875 GHz bands was delicensed in January 2005.

Vendors and distributors aligned their energies to create awareness about
wireless. Channel education and training also helped the market grow. They took
their road shows and training programmes to smaller cities and towns. For
instance, Rashi Peripherals, a distributor of Netgear in India, organized 37
training sessions on wireless and went to places like Ranchi, Guwahati and
Raipur. Such programmes helped explode the myth that wireless was expensive.

Three segments emerged in the market — the hotspots primarily driven by
ISPs and Telcos, the enterprises and the home/SOHO segment.

Hotspot deployment found favour with telecom operators and ISPs such as BSNL,
MTNL, Sify, Dishnet, Bharti and Tata Teleservices. Even though usage remained
low in most hotspots like Internet cafes, restaurants, and other public places,
hotels saw a significant surge in Wi-Fi usage among their guests and other
visitors. It is estimated that India had around 500 hotspots by March 31, 2005.
This was in contrast to 2003-04 when there weren't any significant deployments
except by Tata Teleservices and Sify.

There was a noticeable growth in enterprise networks across verticals both in
terms of deployment of new networks and expansion of existing networks. WLAN
adoption grew as more and more enterprises got aware of the benefits of
wireless, and their apprehensions with regard to security of wireless networks
were suitably addressed by the vendors. While wireless was largely deployed and
used as a complimentary network, many enterprises only deployed wireless in
their new office locations as they found it cheap and convenient. The other
important factor in the growing adoption of wireless was the increase in
notebook penetration on account of a fall in notebook prices. Hotels,
educational institutes, IT-BPO companies were the important verticals in this
segment.

The past year also saw the birth of the home-SOHO segment in India. Even
though in small numbers, Wi-Fi gained traction among home users. While drop in
price of wireless routers turned out to be favorable, Wi-Fi in homes also got a
push from telcos offering broadband services. Bharti was offering Wi-Fi services
over digital subscriber lines in homes in many areas.

There was a shift in the pattern of wireless usage as well. As the deployment
moved from 802.11b to 802.11g which offered higher throughput (54 Mbps), and
many WLAN equipment now offered enhanced security and management features, many
enterprises started using it for various other applications including voice
besides Internet access and email. This resulted in many vendors shifting their
focus to selling "Wi-Fi Solutions" as against selling boxes
particularly in the large enterprise, BPO, MNC and hotspot segments.

Also, WLAN moved beyond buildings and campuses as many enterprises started
using it for building-to-building connectivity using wireless antennas and
bridges. Even though not many enterprises preferred wireless to fibre for
connecting two buildings within the city, quite a few did, as it was easy to
deploy and manage besides being more cost effective.

While Cisco, with its focus on the high end of the market, continued to lead
the market in value-terms, D-Link was the market leader in volume terms. The
year 2004-05 was significant for Netgear as the vendor gained tremendous
acceptability in both the enterprise and home-SOHO space. It's products gained
a lot of mind share and volumes as the three distributors promoted it
extensively across India. HCL Peripherals (Netmax brand) also emerged as a key
vendor last year. The other significant WLAN equipment vendors in the market
were Linksys, Proxim, Dax, Brovis, Compex, Multitech, Allied Telesyn, and 3Com.
Pronto Networks was an important OSS-BSS solution provider to hotspots. There
were a few Chinese brands also in the market. However, they failed to make any
impact, as they could not offer any significant price advantage.

WLAN market is likely to continue on the growth path in the current year.
While enterprise and hotspot segments would continue to fuel growth, home-SOHO
segment is likely to emerge as a key buyer of WLAN equipment. Wi-Fi adoption in
homes is likely to spread on account of the spread of broadband networks and
falling laptop prices. On the other hand, various hotspot providers plan to add
around 1000 hotspots in the current year. Both in the enterprise and hotspot
segments, buyers would increase focus on WLAN solutions with enhanced security
and network management features. It is also likely that more and more vendors
would make their presence felt in the market especially in the lower end of the
market.

Ravi Shekhar Pandey