Uncertainty lies ahead for WLAN market

Article By : EE Times Asia

802.11ac remains a bright spot in the consumer WLAN segment in 1Q17, with revenues increasing 17.6% year over year, according to IDC.

The worldwide wireless local area network (WLAN) market is off to a soft start in the first quarter of 2017, according to data released by market research firm IDC.

The combined consumer and enterprise segments dropped 0.8% year-on-year in the first three months of 2017, finishing at $2.15 billion.

The enterprise segment grew 4.4% year over year in 1Q17 to reach $1.24 billion, according to IDC. Enterprise WLAN growth moderated in 1Q17 compared to 1Q16, when year-over-year growth registered a stronger 8.6%. However, demand for network refreshes, digital transformation (DX) initiatives, and the continued maturation of Wave 2 802.11ac are positive indicators for stronger growth going forward in 2017.

The 802.11ac standard now accounts for 70.9% of dependent access point unit shipments and 84.7% of dependent access point revenues. IDC analysts said this points to a continued trend of 802.11n obsolescence, which is expected to be nearly complete by the end of 2018.

Meanwhile, consumer WLAN market revenue decreased 7% on a year-over-year basis in 1Q17, finishing at $913 million. In 1Q17, the 802.11ac standard accounted for just 28.6% of shipments and 58.2% of revenue in the consumer category. 802.11ac remained a bright spot in the consumer WLAN segment in 1Q17, with revenues increasing 17.6% year over year and shipments increasing 48.5% over the same period.

"A soft start to 2017 suggests uncertainty ahead for the enterprise WLAN market," said Nolan Greene, senior research analyst, Network Infrastructure at IDC. "While digital transformation projects and scheduled refreshes bode well for the rest of the year, economic concerns and geopolitical risks in certain segments may temper growth in 2017."

From a geographic perspective, the enterprise WLAN market saw its strongest 1Q17 growth coming from Latin America, which increased 28.4% year over year in 1Q17, following a 2016 where the region experienced declines in three out of four quarters. A 115.9% year-over-year increase in Mexico is the largest vector of this growth. Central and Eastern Europe (CEE) also experienced improved growth, increasing 18.6% on an annualised basis in 1Q17.

A return to growth for Russia (up 49.1% year over year) was a major factor in CEE's 1Q17 growth, as was Hungary's 48.4% upswing over the same period. Asia/Pacific (excluding Japan) (APeJ) saw another strong performance in 1Q17, increasing 16.2% year over year. While most APeJ countries saw growth in 1Q17, Indonesia and Hong Kong were particularly notable (up 31.1% and 28.7% year-over-year, respectively). Japan experienced a third consecutive quarter of growth (up 11.1% in 1Q17), continuing the reversal of a multi-quarter decline trend that took place from 2014-2016.

Western Europe and the Middle East & Africa (MEA) experienced more moderate growth in 1Q17, with Western Europe increasing 2.5% year over year and MEA increasing 2.2% during the same period. In Western Europe, many countries saw strong growth, with Finland (up 23.6% year-over-year) leading the region. However, a 15.3% year-over-year decline in the UK dampened the overall growth rate. In MEA, country-level performance was wide ranging, with Egypt leading in growth (up 30.3% year over year) and Qatar recording the largest decline (down 29.9%). North America declined 2.8% year over year in 1Q17.

"The digital transformation imperative is hitting hard in emerging markets, fuelling improved growth rates in key regions," said Petr Jirovsky, research manager, Worldwide Networking Trackers. "2017 will see interesting regional growth variations as economic dynamics and the worldwide political landscape poses some risk of IT market volatility."