New, faster Wi-Fi commands high prices

Draft 802.11n wireless LAN gear moved in on the consumer market in the second quarter despite a big price premium.

Fast wireless LAN gear based on a draft version of the next industry standard is making inroads into the small-office and home market despite costing more than twice as much as other products.

In the second quarter, vendors worldwide sold about US$25 million worth of routers and interface cards based on the first draft of the IEEE 802.11n standard, according to a report released Monday by market research company Dell'Oro Group. The figure covers less than the full quarter because the first of the new products didn't go on sale until after the quarter began, said Dell'Oro analyst Elmer Choy.

The 802.11n standard is intended to boost the speed and range of wireless LAN gear through techniques involving multiple antennas. It has sparked some acrimonious debate among vendors and is not expected to be final until some time next year at the earliest. In the meantime, several vendors have rolled out products based on the first draft of the specification.

The new products have a fairly small piece of the market: Draft 802.11n models made up about 8 percent of the router market by revenue, and interface cards about 6 percent. But that was despite an average selling price more than double that of gear using the current 802.11g standard. An average "draft-N" router costs US$86, versus US$36 on average for 802.11g routers, according to Dell'Oro.

By contrast, when certified 802.11g routers were new in the first quarter of 2003, they commanded 29 percent of the market, Choy said. But the price premium then was much less: US$115 versus US$90 for an 802.11b router.

In addition to price, uncertainty over the standard probably also affected second-quarter sales, but Choy expects draft-N sales to accelerate as prices fall during the remainder of the year. The typical customer is probably an early technology adopter buying the new gear to extend the range of a wireless LAN throughout a home, he said. The speed could also benefit users who exchange video or other large files around the house.

It's likely draft-N products won't be upgradeable to the final standard once it comes out, but that won't hurt current buyers too much, Choy believes.

"The prices are low enough that people can upgrade [to a new product] when the actual standard is approved. It's not like they have hundreds or thousands of clients, like they do in an enterprise," Choy said.

Cisco Systems's Linksys division, the biggest seller of home wireless LAN gear overall, has extended its leadership to the new category, Choy said.

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