Lippis Report Issue 97: WLANs and Wired Ethernet Market Parallels

Local Area Network (LAN) changes have ebbed and flowed on a nearly consistent five-year basis. In 1990 the worldwide $100 million dollar plus 10Mbs shared Ethernet market was emerging as the LAN standard. It was only five years later that the introduction of 100 Mbs fast Ethernet and the introduction of Ethernet switching usurped 10Mbs shared Ethernet. Between 1995 and 2000 two very important introductions were made to switched LANs: virtual local area networking (VLANs) and 1 Gbs Ethernet. Now 10Gbs Ethernet modules and switches are the norm as price points and port densities have made 10Gbs downlinks and desktop connections economically feasible.

Selina LoRelated Podcast:
Ruckus Wireless Enters New Mid Tier Enterprise WLAN Market

Listen to the Podcast

Related White Paper: Forming RF Beams and Making Wi-Fi Faster On Purpose with 802.11n

Get the Whitepaper

Now with every new generation of LANs, the market has grown by billions of dollars. The transition from shared to switched LANs was explosive, growing a $5.2B market in 1995 to over $14B in 2000 and expecting to grow to over $18B in 2010. This four times market expansion was due to the transition from shared to switched LANs plus favorable price/performance characteristics thanks to an order of magnitude increase in speed nearly every five years. There is no lack of innovation in the wired Ethernet market as many of the large firms will be offering 10 to 100G data center platforms this month and Power over Ethernet requirements are driving new shipments.

There has been a school of thought in the industry that WLANs (Wireless Local Area Networks) will cut into wired Ethernet growth, but it has not happened. WLANs have been an explosive market with high double-digit annual growth. WLAN's industry market size is approximately $1.6 billion, representing a little more than 10% of the switched Ethernet market. The Dell'Oro Group estimates that only 15 percent of large enterprises have deployed WLANs, meaning that WLANs are very early in their corporate adoption rate.

From a bandwidth provisioning point of view WLANs are where shared Ethernet was in the early 1990s, meaning that x amount of bandwidth is shared among access point users. From a security point of view WLANs are decades ahead of where shared Ethernet was in the 1990s, to the point where WLANs are more secure than wired Ethernet. And yes, WLAN deployments will continue to increase based upon their current technical architecture where dependent access points and wireless LAN controllers account for nearly three quarters of the market revenue. This architecture extends the shared bandwidth of WLANs so that IT leaders can build large networks, and will drive penetration to reach almost 30 percent over the next 5 years, according to the Dell'Oro Group.

But WLANs are on a technical architecture trajectory similar to Ethernet. As mentioned above, Ethernet was first a shared medium. To increase Ethernet's usefulness different media was used, coax, twisted pair, fiber, etc., and bandwidth was increased. This is where WLANs are today. We have 802.11a, b, g, n, etc., that are standard shared bandwidths. Innovations in RF management, network services placement via controllers, etc., increase WLAN reliability, network coverage and manageability. 802.11n is just starting to be offered by all the major networking and WLAN players. 802.11n is an emerging, next-generation wireless standard that will trigger significant upgrades to existing WLAN deployment and wired infrastructure to support increased down stream bandwidth loads. In addition, with the increased price tag of 802.11n, expect WLANs to garner an increased share of networking budgets. What will drive 802.11n projects into existing enterprises and new greenfield deployments is not only its performance increase from 54 Mbps available in 802.11a and g, to now 300 Mbps within 802.11n but its MIMO (multiple-input and multiple-output) technology which significantly increases reliability of the wireless network for all WLAN clients, that is 802.11a, b, g and n.

Companies such as Cisco, Aruba Networks, Motorola, Ruckus Wireless, Meru Networks, Trapeze Networks et al., have capitalized on the market need for more robust WLANs. To help scope the enterprise WLAN space, Cisco is the dominant WLAN provider with 65% share followed by Aruba at approximately 10%. Motorola, thanks to its acquisition of Symbol Technologies is another major enterprise player. Ruckus Wireless is a high-growth WLAN newcomer entrant into the emerging small- to medium-sized business. With nearly a $1B of market cap and just 10% enterprise WLAN share, Aruba Networks is a bell weather to the health of this market.

What drove the Ethernet market from hundreds of millions of dollars in market size to billions was the introduction of switching. To capitalize on this new market twenty plus companies were VC funded in the early 1990s. Firms such as UB, Synoptics, Cabletron, Kalpna, Synernetics, Crescendo/Cisco, Alantech et al., innovated and educated the market to the value of switching.

Clearly different requirements call for different solutions. Today's mobile enterprise is driven by extending unified communications over WLANs, location-based services and the huge increase in laptop computing, for example. Laptops and desktop computing drove the WLAN market over past five years, but this next business cycle will be driven by a sharp increase in both the quantity and diversity of Wi-Fi devices. Wi-Fi is being built into everything from single- and dual-mode phones, medical devices, printers, manufacturing scanning devices, Wi-Fi RFID tags, etc. In fact, it's estimated that there will be up to 1.5 Billion new Wi-Fi devices shipping to the market in the next three years alone. With a 15% current coverage model, and very little 802.11n deployed, it is safe to say that the average enterprise WLAN isn’t ready for these Wi-Fi devices, which will be both sanctioned by business leaders and therefore, find their way into the enterprise.

As WLANs become pervasive, and they will be pervasive, their shared bandwidth architecture will give way to a scheme, which segments bandwidth and offers wireless switched service. Just as wired LANs moving away from a shared medium to a switched architecture increased scale, network performance and design options, WLANs will need such a transition in the future to accelerate its adoption and meshing may be the way.

Meshing transitions a shared WLAN into a switched WLAN architecture by offering segmentation of user access and backhauling. A wireless mesh network is made up of radio nodes in which there are at least two pathways of communication to each node. The coverage area of radio nodes working as a single network becomes a mesh cloud. Access to the mesh cloud is dependent on the radio nodes working in harmony to allocate bandwidth and access thus increasing bandwidth and reliability through redundancy. Faulty radio nodes are bypassed as wireless mesh networks self heal. To deliver on segmentation, wireless mesh utilizes routes between radio nodes. Wireless mesh nodes forms paths or hops, which connect together to form the wireless mesh network. WLAN meshing is being standardized in project IEEE 802.11s

WLAN meshes may do the same to WLANs that switching did for Ethernet, that is increase network design options, network diameter, reliability, availability and performance. While it may take as long as 2012 until WLANs start to slow down wired Ethernet port shipments, there's no question that WLANs are on the same trajectory as wired Ethernet. Expect to see existing WLAN providers and a flurry of new WLAN companies touting mesh WLAN solutions over the next 18 months. Before meshing comes into its own, 802.11n will have reached its natural adoption and deployment rate, which could be a five-year span. These start-ups will have to overcome meshing's current liabilities of lower WLAN network performance. But this was the same hurtle that early Ethernet switch companies managed too. As existing and new companies enter the mesh WLAN market, increased price/performance ratios and market adoption will follow as will the emergence of the multi billion dollar WLAN enterprise market.

Comments are closed.