Component shortages impact wireless LAN market in Q2, says researcher

dellorologoRedwood City, Calif. — Global wireless LAN market sales in the second quarter of 2009 were constrained by supply shortages, particularly of high-speed memory chipsets, which impacted a number of equipment manufacturers, according to a report from Dell’Oro Group. Enterprise products were hit the hardest, followed by products targeting the small office home office (SOHO) users, according to the market researcher.

The report, Wireless LAN Quarterly Report, indicates that the supply shortages significantly impacted Aruba and Cisco’s enterprise products, and D-Link and Netgear’s SOHO products.

“The overall wireless LAN market sales were about flat quarter-to-quarter at just under $1.0 billion,” said Tam Dell’Oro, president and founder of Dell’Oro Group. She estimates that sales would have risen by about five percent.

“U.S. government stimulus programs are turning into sales orders faster than people expected. It is not clear that the shortages are over,” said Dell’Oro. She also said that China’s stimulus funding is also driving an upswing in business in the country, while Japan and the U.S. are stabilizing.

Dell’Oro also notes that the wireless LAN market is showing signs of a recovery. Wireless LAN sales are down 14 to 15 percent compared to year ago levels, while enterprise equipment is still struggling with sales levels 20 to 25 percent below a year ago, she said.

However, the 10 Gigabit (10GB) Ethernet network adapter market saw double-digit sequential growth in both port shipments and revenue during the second quarter of 2009. Dell’Oro’s report, Network Adapters Quarterly Report, also indicates that average selling prices fell steeply during the quarter.

“Numerous factors are falling into place to drive steep 10GB Ethernet network adapter price declines,” said Seamus Crehan, vice president at Dell’Oro Group. “These include the migration from single- to dual-port cards, as well as a mix shift to copper-based technologies,” Crehan said. In addition, a surge in silicon controller shipments during the quarter resulted in Broadcom gaining a significant share in this segment.