Frenzied consolidation and the emergence of 802.11n technology are rapidly changing the face of the wireless LAN (WLAN) market and channel onlookers have claimed it remains a vibrant operational space.

There have been a raft of mergers and acquisitions (M&A) recently, including the buyout of WLAN vendor Colubris by HP ProCurve. Other high-profile deals include Trapeze Networks’ acquisition by cabling specialist Belden and storage vendor Brocade’s purchase of Foundry Networks.

More consolidation came in the shape of a joint venture between Siemens’ enterprise communications arm and The Gores Group, private equity backer of vendor Enterasys. Wireless security specialist AirDefense was also snapped up by mobile phone titan Motorola six weeks ago.

Barrie Desmond, director of distributor VADition, was heartened by the surge of M&A activity. “Consolidation is always a good sign that we have a disparate number of players in the space all fighting for market share,” he said.

Carl Blume, director of strategic marketing for Colubris, added: “The HP ProCurve deal gives us access to a wider customer base and more routes to market and that is an exciting factor for us. Colubris resellers will benefit from having access to the breadth of ProCurve products.”

More strings to the bow
Blume said he expects the overall market to grow more than 20 per cent annually over the next few years. He also claimed now is an ideal time for resellers to bolster their portfolio with a wireless offering. “It gives resellers another tool that they can use. In a lot of deals, if you do not have WLAN in your portfolio, you do not have a chance to compete for that business,” he said.

David Confalonieri, vendor Extricom’s vice president of marketing, also foresees robust growth in the wireless space. “For all the bad macro-economic news, we see demand is still strong. The market is still quite healthy and we are talking about 20 to 30 per cent annual growth.”

The development of 11n technology and the proposed amendment to the existing wireless standard is another factor set to shake up the space. Desmond claimed 11n could be a catalyst for VARs to jump on the wireless bandwagon.

“The 11n technology has been the thing everyone has been waiting for. It is the finger in the dyke at the moment and once you take the finger out, it will open the dam. We are seeing opportunities in various markets and the enterprise space. Enterprise adoption will ultimately drive full-scale adoption of the technology,” he said.

Confalonieri indicated that the emergence of 11n would drive customer demand to run more sophisticated applications over WLAN.

“WLAN can be hard to deploy ­ every reseller will say that. Now, it has to be multi-application data and voice. We must have mobility and we must have predictable ways to ensure quality of service,” he said.
“There are two markets for WLAN: the customers that look at it as a convenience and those, such as industrial, healthcare and education, that look at it as an imperative. The white-collar enterprise office environment, that has always been the more elusive one.”

Reliance on public sector
Jess Thompson-Hughes, managing director of wireless specialist distributor React Technologies, claimed public sector deals remained the lifeblood of his business. “It is very cyclical. We can predict pretty much to the penny which months will be good and which will be bad because it follows public-sector funds at the moment. Businesses are not falling over themselves to get into it and it is seen as something they would like to have, rather than a must have.”

Thompson-Hughes also pointed to a lack of specialised skills in the channel as a stumbling block for WLAN. “The majority of companies that offer wireless are not specialist and it is not their core business. WLAN is a big step for voice over IP players,” he said.

Desmond also encouraged channel players to enhance their wireless skills. “My biggest concern is a lack of skill sets in the channel. WLAN is still seen as a bit of a black art. My message to the channel is to invest in training in this technology because there are still good margins.”

A recent report from research house Infonetics found the WLAN market was worth about $500m (£275m) in the first quarter of this year. Further research from The Dell’Oro Group predicts the WLAN enterprise market will be worth some $4bn annually by 2012.

Blume was heartened by the figures. “WLAN is giving resellers opportunities to get into new market segments and is really broadening their reach. There are so many opportunities and the market is growing so rapidly. It is an exciting place to be, especially if you are a reseller.”