Vendors depleted their backlogs of Wireless LAN (WLAN) orders faster than expected, bringing worldwide revenues down 4% year-over-year (Y/Y) in 3Q 2023.
Following an unprecedented stretch of revenue expansion, vendors are now reporting flat or declining orders from enterprises, and the slowdown is expected to last for several more quarters, according to a new report from Dell’Oro Group.
“3Q 2023 was an inflection point in the WLAN market. A large variability in vendor revenues summed to a slight market contraction,” says Siân Morgan, research director at Dell’Oro Group. “Cisco eked out a 3% Y/Y gain on a calendar quarter basis, with license revenues supporting the expansion despite a decline in the number of units shipped.
“The next few quarters are expected to be a challenge for WLAN vendors. Enterprises and system integrators must take the time to deploy the equipment they received before embarking on new projects. In addition, the return to demand-driven conditions is expected to put downward pressure on unit prices. Only a select few vendors can grow WLAN revenues in these market conditions,” Morgan adds.
Additional highlights from the 3Q 2023 Wireless LAN Quarterly Report include:
* Y/Y revenue growth varied widely from vendor to vendor, ranging from under -50 to over +50%.
* Price growth helped soften the decline in unit shipments, but prices for the different WiFi technologies are shifting.
* More vendors recognized WiFi 7 revenues, but enterprise class WiFi 7 sales will not become significant until 2024. Meanwhile, WiFi 6E adoption continued to climb slowly in 3Q 2023, to just over 10% of units shipped.
* Not all verticals declined with the market. For instance, WLAN sales to the Healthcare vertical grew Y/Y in 3Q 2023.
* WLAN sales to the major regions were flat or down, while the smaller regions grew Y/Y.
* Revenues from Public Cloud-Managed WLAN contracted Y/Y for the first time in history, although they still outperformed Premises+Private Cloud-Managed WLAN on a Y/Y basis.