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Wireless infrastructure market heading for $201 billion by '09

Posted: 14 Jan 2005 ?? ?Print Version ?Bookmark and Share

Keywords:wireless? 3g network? cellular? wlan?

Two soon-to-be-released reports on the wireless infrastructure market suggest the sector is growing but at a slow pace and still has some major restructuring in the pipeline.

According to ABI Research, while the push to deploy 3G networks has produced some growth, companies are still afraid of over-extending, and the biggest factor driving down spending remains the high cost of base stations.

And, warn ABI researchers, with most industrialized regions enjoying widespread cellular coverage, wireless operators are choosing to increase the capacity of existing systems instead of building more infrastructure.

Instead of broadening coverage, operators are increasing their capacity to handle more subscribers. Compared to buying base stations, increasing capacity is cheap, notes ABI analyst Brian Pellegrini. One server can handle hundreds of thousands of new subscribers, and most base station upgrades now involve software more than hardware.

"Infrastructure vendors probably won't want to hear this, but there will probably be some consolidation in the industry between now and the end of the decade," adds Pellegrini.

And Business Communications Company Inc. says in a report to be published next month that worldwide wireless infrastructure expenditure, now estimated at $177.5 billion, will show an average annual growth rate of 2.5 percent to be worth $201.2 billion by 2009.

The revenue covers four main sectors: WAN hardware (for example cellular, satellite, and cable modem products); wireless LANs; end-user devices such as PDAs, cell phones, and notebook computers; and business software, which includes enterprise resource planning, billing, and security products.

The numbers included represent only purchases made to support wireless connections.

Not surprisingly, the two largest segments in the market are WAN hardware and end-user devices. WAN hardware will see an AAGR of 1.8 percent as carriers move to 3G technology and begin to deliver more video transmissions over their networks. End-user devices account for more than half of the revenues, and represent an area of intense innovation. However, the growth rate there is somewhat lower because of price pressures.

The fastest growing segment according to the researchers is WLANs, which are just now entering a rapid ramp-up phase.

The figures show the WAN hardware segment growing from an estimated $66 billion in 2004 to nearly $72 billion by 2009, an AAGR of 1.8 per cent. The corresponding figures for WLANs are $2.3 billion for 2004 going to $4.1 billion at an AAGR of 12.3 percent; $95 billion in 2004 for end user devices growing at 2.7 per cent to be worth nearly $109 billion by 2009; and business software growing at 2.7 percent from $14 billion to $16.2 billion.

- John Walko

EE Times

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