Consolidation Continues in WLAN Market - InformationWeek

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6/11/2008
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Consolidation Continues in WLAN Market

Finding yourself a partner or you will find yourself out of business. Those may be the only two options left for wireless LAN suppliers. With the market constricting, one vendor found itself a Sugar Daddy.

Finding yourself a partner or you will find yourself out of business. Those may be the only two options left for wireless LAN suppliers. With the market constricting, one vendor found itself a Sugar Daddy.Recently, Belden, one of the industrys leading suppliers of copper and fiber optic cabling, cable management, and connectivity products, decided to expand its reach, paying $133 million in cash for Wi-Fi supplier Trapeze Networks. Because of the growing emphasis on mobility, Belden, which generated $2.0 billion felt compelled to push into that space. Market research firm Infonetics pegged the Wi-Fi market at $1.9 billion in 2007, and it is still growing at a healthy rate: revenue increased 20% last year.

Belden has a significant presence among small and medium businesses because it has focused on low cost, easy to install products that are often sold through the companys partners. Trapeze Networks, which had 2007 revenues of $56 million, has had success in the healthcare, education, manufacturing, retail, and government sectors. It had carved out a decent market position; the company developed a strong management platform and used it to gain customers.

But as the wireless market has been maturing, it has become more difficult for smaller vendors to gain attention as well as the size needed to keep their product pricing competitive. Consequently, other WLAN suppliers have been acquired: Morotola purchased Symbol and Cisco bought Airespace. The remaining small players will feel more pressure to get bigger. Colubris, Extricom, and Meru Networks have remained private, and while Aruba Networks has gone public, it too may be a takeover candidate. Chances are good that there will be more shakeups in the coming months. Behind the scenes, vendors are certainly jockeying to position themselves as viable long term suppliers.

Consequently, small and medium businesses should expect volatility among the second tier suppliers. Once a purchase is made, vendors must dramatically restructure their operations, a process that is never easy. Eventually, the market will sort itself out, and the long term winners and loser will become clear, but in the short term, customers can anticipate dramatic changes in their interactions with their suppliers.

Who is your WiFi vendor? How do you feel about the companys future? How many of you have been though a situation where one of your key vendors was acquired? How smooth or uneven was the process?

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