Wireless Vendors Bitch About A Bad Quarter

The enterprise wireless LAN market has had a terrible quarter, with users’ plans put on hold – and the vendors are arguing over small gains and losses in market share.

In the first quarter of this year, $334 million worth of enterprise Wi-Fi kit was sold, down more than 25 percent from a peak in the third quarter of last year, according to figures from Dell’Oro Group, but vendors Aruba and Meru are celebrating where they can – and both claiming second place in a key part of that market, equipment that meets the new faster 802.11n standard.

Neither company – nor any of the lower-placed Wi-Fi vendors can claim any success against Cisco, which has maintained a more than 60 percent share of the shrinking Wi-Fi pie. And Aruba has a very clear second place overall, at more than eight percent of the revenue.

However, both Aruba and Meru are at each other’s throats for the coveted second place in the 802.11n sector – an important standard which provides faster, more reliable connections. 802.11n kit makes up about a fifth of the wireless LAN market now, but vendors believe 802.11n is the key to replacing wired networks in the enterprise – and by the end of 2010, it is expected that all new enterprise wireless LANs will use 802.11n.

Meru, an interesting company with a novel “virtual cell” wireless LAN architecture, claims to have reached second place with 9.7 of the market for 802.11n access points. However, a longer established player, Aruba, also claims second place. It has 7.8 percent of the 802.11n market with equipment sold under its own brand but around 12.7 percent when it adds in equipment sold through an agreement with Alcatel Lucent.

So although Aruba shipped more boxes, Meru claims to have had more money: “If Vendor B sells vendor A’s kit, the markup belongs to vendor B,” grumbled Rachna Ahlawat, marketing vice president of Meru. “According to brand market share, Meru is number two.”

Aruba defended its statistics: “Aruba remains solidly in second place behind Cisco in 802.11n market share by total revenue and units shipped,” boasted Roger Hockaday, director of marketing for Aruba.

In fact, Meru started out with a larger share of the 802.11n market as it was first to produce an enterprise wireless LAN access point in 2007, and then shared the market with the second arrival, Cisco for six months. Aruba initially took second place under its own brand when it arrived.

Both may be hitting each other, to distract from a more significant fact: neither has made any kind if dent in Cisco’s 60 percent share – despite years of offering lower prices and claiming better value, and just at a time when the economic climate should make customers open to those virtues.

In any case, no one but Meru and Aruba thinks this quarter’s figures mean anything: “One quarter’s results do not make a trend,” said Tam Dell’Oro, head of Dell’Oro Group. “1Q09 was lousy for just about everyone. For some folks it was worse than others. Let’s see how 2Q09 comes in before we pass judgement.”

And finally, another old soldier in the WLAN market claimed to have gained share: Trapeze Networks, sold last year to cabling company Belden, claimed to have “doubled” its share. Dell’Oro gives it 1.8 percent of the enterprise WLAN market.