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Tsunami of Spending Floods Education and Government Verticals

Dell’Oro Group published an update to the Wireless LAN market 5-Year Forecast report in July 2021. We lifted our forecast and resumed our pre-pandemic outlook that spending on Enterprise-class WLAN equipment over the next five years will approximate $40 B worldwide, resulting in a CAGR of high single digits.

Governments around the world are injecting enormous amounts of cash into advancing network technology in their education systems and improving Internet access to their citizens. Enterprise WLAN equipment just happens to be in the sweet spot. Manufacturers are in the right place, at the right time, particularly those with established relationships in the education and government vertical industries.

Enterprise-class WLAN equipment has been flying off the shelf for the past three quarters. All industry participants from systems manufacturers, to component manufacturers to network integrators that we have interviewed indicated bookings are stronger than supply. Demand is being fueled by an influx of fiscal stimulus from governments of many countries, which we have estimated to approximate $1 B. We reckon there has been some spending from a few large enterprises, but we have yet to see a recovery in spending from broad-based private enterprises of all sizes, and all vertical industries.

We are modeling this phenomenon of extraordinary levels of government spending to abate over the next year, however, we question whether we are entering an Eisenhower-like era of technology infrastructure buildout which could span a decade. Additional initiatives could surface particularly if existing projects are successful, and more countries may also launch initiatives, not wanting to be left behind. We are watching for announcements of government technology or digitization initiatives.

We previously predicted a surge in sales in 2022 with the arrival of Wi-Fi 6E products, but users are not waiting, they are spending now. We learned that many government-funded projects have deadlines, and therefore users are deploying products available now. Ergo, the surge appears to be happening in 2021 rather than 2022.

 

Wi-Fi 6E and Wi-Fi 7 Low-End Access Points Accelerate Adoption

We model a more rapid penetration rate of both Wi-Fi 6E and Wi-Fi 7 because we expect lower-end products to come to market sooner than higher-end. This is a change, as previous technology transitions were led with high-end products, not low-end. Lower-end products dominate market volume and that may translate into a faster return on investment for both semiconductor and system manufacturers. Additionally, the performance advances with 6 GHz spectrum even with a lower-end access point, could delight most users.

 

Cloud-managed and Premises-managed Network Applications to Lift Sales

Sales of WLAN network management equipment (named controllers), and specialty applications such as troubleshooting, and location finding/tracing have been approximately the same level for the past 10 years, while overall WLAN market sales have about doubled, and access point unit volumes have quadrupled. Manufacturers have been developing new features and selling them separately from the management hardware, as subscription licenses. This has been intensely competitive, providing a way for manufacturers to differentiate and rapidly bring new capabilities to market. As in many intensely competitive markets, we’ve recently seen declines in license prices, resulting in a flurry of activity which portends 2021 to be a year of change. We are optimistic that manufacturers will be rewarded with higher revenues as they develop applications reducing customer pain points.

To learn more about the Wireless LAN market, or if you need to access the full report, please contact us at dgsales@delloro.com.

About the Report

The Dell’Oro Group Wireless LAN 5-Year Forecast Report offers a complete overview of the industry, covering Enterprise Outdoor and Indoor markets, with tables containing manufacturers’ revenue, average selling prices, and unit shipments by the following wireless standards: 802.be (Wi-Fi 7), 802.11ax (Wi-Fi 6 and 6E separately reported), 802.11ac (Wi-Fi 5) Wave 1 vs. Wave 2, 802.11n, and historic IEEE 802.11 standards. It includes forecasts for regions of the world and for Cloud-managed vs. Premises-managed. To purchase these reports, please contact us by email at dgsales@delloro.com.