Wireless LAN market on fire, Motorola closing in on Aruba while Cisco slips

Market research firm dell’Oro Group has published its latest quarterly market update on the wireless LAN industry. According to the firm, the market hit an all-time high in the fourth quarter of 2009. The ratification of 802.11n has really set this market on fire. Apparently IT organizations in the retail, education, healthcare and hospitality sectors are all spending a ton of money on new wireless LAN infrastructure right now.

This is driving a lot of revenue growth, but some vendors are reaping the benefits more than others.  I asked dell’Oro analyst Loren Shalinsky for detials.

Cisco remains number one in the market by a huge margin, Shalinsky said. But Cisco did not have a good quarter. Its wireless LAN market share shrank by about four points he said, and revenue was down for the quarter (Shalinsky didn’t say by how much).

Motorola had an awesome quarter, growing by 40% sequentially from the third quarter, he said. The growth spurt nearly helped it overtake Aruba Networks as the number two vendor for enterprise wireless LAN. Aruba’s revenue grew by 7% in the same period. Shalinsky said total product revenue for the fourth quarter was $42 million for Aruba and $40.5 million for Motorola. Of course, Aruba would point out that it is also selling quite a few products through it’s OEM relationship with Alcatel-Lucent, which saw its revenue grow by 30%. Alcatel actually overtook Meru Networks in market share and claimed the number five position. (HP ProCurve is holding steady at number 4).

New wireless standard with speed that slaughters 802.11n … in a very small world

A new wireless standard that outpaces 802.11n in speed by tenfold — but at a much shorter range — was approved by the Wireless Gigabit Alliance this week.

The Multi-Gigabit Wireless Specification or WiGig 1.0 works on the little used 60 GHz band and supports data transmissions of up to 7 Gbps. But the technology creates only a 10-meter range wireless network – much smaller than the 100-meter network enabled by 802.11n Wi-Fi.

The technology can, however, be used with beamforming to automatically switch over to Wi-Fi at the 10-meter border, extending to a 100-meter network with throughput of 600 megabits per second.

WiGig 1.0 will likely be used for home entertainment and will be built into PCs, TVs, cameras and mobile devices. The technology will enable users in the same house to watch multiple streams of video in different rooms. It is possible that the technology will be used to supplement 802.11n to provide video over WLAN in a multitenant environment, which could include universities and enterprise scenarios.

Devices using the standard are expected to be available in Q1 of 2010.

Dell’Oro will adjust reporting after WLAN market share squabble

Earlier this month I wrote a story about how Aruba and Meru were both claiming second place in the 802.11n enterprise wireless LAN market based on the same numbers from Dell’Oro Group. There were a variety of claims made by the vendors over the issue, but the central discrepancy appeared to be how OEM sales were counted towards market share. Aruba has a significant OEM channel through Alcatel-Lucent. Dell’Oro reports market share based on brand, so Aruba wasn’t getting credit for the sales Alcatel made.

Today Dell’Oro sent a letter to Aruba, which I peeked at today. In it, Tam Dell’Oro wrote that her firm will “add a section to our Enterprise WLAN Vendor Tables with our 2Q09 report which reflects the data by manufacturer. That is, those shipments that are produced by Aruba, regardless of which distribution channel it flows through, will be reflected as Aruba.”

Based on that, Aruba’s market share in 802.11n access points appears to be significantly higher than Meru. Aruba moved 15,000 802.11n APs in the first quarter of this year (both Aruba and Alcatel-Lucent branded products)  versus Meru’s 10,000.

It’s not clear to me at this time wheter Dell’Oro will start reporting OEM sales data in this way for other markets beyond wireless LAN.

This week in WLAN adoption: Schools love Ruckus, Aruba gets logistical

Looking at last week’s wireless LAN adoption news…

Ruckus took the opportunity this week to announce that 24 colleges and universities have decided to install Ruckus’ 802.11n wireless LAN technology over the last 90 days. The most recent school to sign on is Benedict College in Columbia, S.C.  Benedict will run campus Internet radio and television over the networks, as well as IP video surveillance.

The rest of the schools that have signed on with Ruckus include Temple University, the University of Pennsylvania, the University of Virginia at Wise, Carleton University, Emmanuel College, the University of Toronto, Lake Superior State University and an assortment of international schools in Switzerland, Canada, Costa Rica, Indonesia, India, and Malaysia.

Meanwhile, Aruba Networks announced that French logistics company Groupe FM Logistic has bought Aruba’s AirWave Wireless Management Suite to manage its heterogeneous wireless LAN network in warehouses spread across 12 countries.

Group FM Logistic will use AirWave’s role-based administration and its fault and management reporting features to consolidate management of its Cisco and Motorola Wi-Fi hardware.

UPDATE: Ruckus’ original press release on its higher education customers mistakenly identified Temple University as a customer. Temple University is actually a Meru Networks customer.

This week in WLAN adoption: John Marshall Law buys Aerohive, Virginia Union Univ. buys Aruba

In a new semi-regular feature on The Network Hub, I’m going to provide a quick run-down of newly announced wireless LAN projects. I get a lot of press releases from WLAN vendors about customer wins. I don’t get to write about all of them, but I can at least offer you a quick summary of the latest decisions your peers have made.

First up is John Marshall Law School, which is deploying an 802.11n wireless LAN network from Aerohive Networks on its Chicago campus. The school is replacing a legacy WLAN from Airspace (acquired by Cisco in 2005).  The old system was presenting interference and attenuation problems within the school’s century-old buildings. Centralized management was also an issue. The school chose Aerohive from a short list that also included Aruba, Meru and Xirrus.  The school chose Aerohive for its ease of deployment, controllerless architecture and wireless mesh capabilities, according to the case study.

Also this week, Aruba Networks announced that Virginia Union University has chosen their 802.1n wireless LAN to retrofit the wireless network on its 84-acre campus in Richmond (Click on this link for more information on Aruba’s specific solutions for the education market). The school had a network of independent, “Fat AP” access points that lacked centralized management capabilities and performance. Robert Gray, the schools IT director, said he chose Aruba’s AP-125 access points for their coverage and range. He is also using some of Aruba’s advanced management technologies, such as Adaptive Radio Management, Aruba’s policy-enforcement firewall and the AirWave Wireless Management Suite.

Meru and Aruba both lay claim to second position in 802.11n WLAN market

Would the real second fiddle please stand up and take a bow?

This week both Meru Networks and Aruba Networks have issued press releases claiming that they hold the second biggest share of the 802.11n wireless LAN market. Not only that - both vendors are citing the same research: Dell’Oro Group’s “First Quarter 2009 Wireless LAN Report.”

Yesterday, Meru announced that it had earned 12% of total vendor revenues for 802.11n products, ahead of Aruba (the long-standing second-place WLAN vendor).

Today Aruba sent out its own press release refuting Meru’s claim. Aruba claims a 15.5% market share. In his email, Aruba Head of Strategic Marketing Michael R. Tennefoss wrote: “Yesterday Meru issued a press release claiming that it had displaced Aruba from the #2 position, a statement not born out by the facts as Meru neglected to include Aruba’s substantial OEM sales.”

I’ve left a message with Dell’Oro’s president, Tam Dell’Oro for some clarification on this. I’ll update later with her response.

Wireless LAN spending is down, 802.11n spending is up

Market analyst firm Dell’Oro published a 1st quarter assessment of the wireless LAN market which showed that a severe 11% drop in enterprise spending from the 1st quarter of last year and a 15% drop from the 4th quarter of 2008.

Dell’Oro says Cisco’s huge share shrank a little, from 63.1% to 60% from a year earlier. HP ProCurve doubled its share from 1.7% to 3.1%, no doubt thanks to its acquisition of WLAN vendor Colubris. Aruba’s share is 8.1% and Motorola’s is 5.9%.

Despite the overall poor showing for WLAN, 802.11n technology sales grew 4% from the 4th quarter of last year, according to a report from PCWorld.  and 802.11n technology now makes up the majority of the WLAN sales for the first time ever.

Cisco’s domination in the wireless LAN market remains intact, but it’s interesting to see their share shrink just a little bit. In fact, looking at the numbers, the amount of market share Cisco lost equals ProCurve’s ENTIRE market share.

The WLAN market remains extremely crowded and some of the largest network infrastructure vendors not named Cisco (Brocade, Juniper) lack a true WLAN product line. I expect to see some more consolidation before the recession ends.

IEEE basics: Standards, wireless technology make communication convenient

During the IEEE 125th anniversary celebration on Monday, I had the pleasure of meeting IEEE President John Vig and shooting a brief video with him. Here, Vig discusses how the IEEE is involved in promoting standards of interoperability, and the importance of technological contributions made by technology professionals.

I also spoke with Technical Strategy Associates President and IEEE member, Dr. James F. Mollenauer. He took time out to talk about the development of 802.11 Wi-Fi standards and the importance of wireless standards as promoted by the IEEE.

Aruba is banging out the wireless LAN customer wins

Aruba Networks emails me quite often with wireless LAN customer wins. Either it is signing more customers than other WLAN vendors, or it simply publicizes its wins more often.  Usually I don’t bother to write about this customer news, but a couple of recent announcements have caught my eye.

First there was Aruba’s announcement that Carnegie Mellon University has just completed the deployment of 1,540 802.11n access points across its campus. Aruba said that Carnegie Mellon was particularly attracted to the company’s Adaptive Radio Management (ARM) technology, which simplified access points deployment and maintenance. The school was also attracted to Aruba’s Policy-Enforcement Firewall (PEF), which provides identity-based security, Quality of Service (QoS) control and traffic management.

Meanwhile over in Australia, IBM announced that it had won a contract from the government of New South Wales, to design, deploy and manage wireless LAN infrastructure for 463 secondary schools. IBM will install Aruba technology in all of those schools, providing wireless connectivity to more than 200,000 students and 25,000 teachers. That’s a big contract and a lot of access points.

Cisco tightens their belt while Aruba sharpens the ax

The notoriously frugal Cisco is tightening their belts a little tighter, more or less shutting their offices over the holidays and freezing hiring for a bit. They hope to save $2 billion, which isn’t small change even for the world’s largest networking equipment provider.

They also are looking to cut travel expenses, and since Cisco insiders tell us everyone at the company flies coach to begin with, we guess that means more TelePresence. Layoffs, however, are not planned, at least for now, according to Dow Jones Newswires:

Cisco Systems Inc. (CSCO) doesn’t have any layoffs planned at this point, according to Chairman and Chief Executive John Chambers. …

Chambers, speaking to analysts at a conference hosted by Credit Suisse, said that if the company was to have layoffs, it would be a one-time event, rather than a string of events.

Sounds like he’s hedging his bets, just in case, but it might be tough to cut the fat from Cisco’s already lean (for a company of their size) operation.

Aruba isn’t so optimistic. The company announced they will be cutting jobs to reduce operating costs by 10%, though the exact number getting laid off is unknown.

This is despite Aruba’s record revenues last quarter, which, according to Farpoint Group’s Craig Matthias, came at a price:

“If you look at Aruba’s margins, they have eroded some, and obviously discounting is a heavy element in winning deals,” Mathias said. “So I’m expecting that their margins probably won’t improve much with their sales. But this is an industry that will continue to grow, and it will accelerate into the future.”

It also calls into question what wireless vendors keep whispering to me: Their equipment — and business prospects — are counter-cyclical. The theory goes that wireless is a great way to cut costs: No more having to futz around to rewire desk connections, less physical wiring to lay down, etc. etc. But with such a crowded field of vendors, even the winners might have a tough time staying or getting profitable.

Further Reading:

• IT economic outlook: Not so good
• Aruba to Customers: Get 200% more WLAN bandwidth, free!: Aruba in more charitable times … a month ago.
• Overheard: How to keep your IT job during a recession