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AirFlow Networks' decision last week to scrap its wireless LAN switch might be the first tremor in an expected shakeout of this market.
The company, which launched its switch last September, decided it would be too expensive, and too risky, to compete with a flock of other similar start-ups. Instead, it will try to license its software to its former rivals, as well as to Ethernet switch vendors and WLAN chip makers.
"If we were going to maintain a systems business, we'd have to build out an international sales organization, spend money on marketing, staff up technical support, and spend money trying to duplicate all the features and functions that a dozen other vendors have," says Brian Jenkins, AirFlow's vice president of marketing.
Aaron Vance, a senior analyst with Synergy Research Group, says the move makes sense and should enable AirFlow to better exploit its VoIP over WLAN and other intellectual property.
"There's going to be some consolidation," Vance says. "The market is just not going to be able to support all of these companies."
Because most are privately held and reveal few financial or other numbers, it's difficult to get a read on the financial health of the WLAN switch vendors. WLAN switches made their debut last year, but researchers have been frustrated in getting shipment numbers, leading to suspicions on their part that not many units are being bought.
"I've sent surveys out to the WLAN switch guys for the last few quarters, with only Symbol and Aruba agreeing to report," says Gemma Paulo, senior analyst with In-Stat/MDR. Symbol, which is publicly held company, reported shipping 3,200 switch units in the fourth quarter of 2003, up from 2,145 in the third quarter. Aruba said it shipped 176 units in the fourth quarter, up from 74 in the third.
Cisco doesn't actually sell a WLAN switch, but is considered the dominate player in enterprise WLANs given its 36% to 45% share of the high-end access point market in the latter half of last year, according to Synergy. Plus, Cisco plans to enable its traditional switches to handle wireless traffic. Extreme Networks, Foundry Networks and other established switch makers have already done this.
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