Market Insight

WLAN revenue growth takes a breather in Q3 2017

December 15, 2017

Matthias Machowinski Matthias Machowinski Directing Analyst, Enterprise Networks and Video

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Following is information and insight from IHS Markit about our Q4 2017 WLAN Equipment Market Tracker, which includes data for the quarter ended September 30, 2017. 

Highlights

  • Access point (AP) shipments grew 12 percent year-over-year in the third quarter of 2017 (Q3 2017), with a total of 6.7 million APs shipped; 1.9 million of these were 802.11ac wave 2 capable
  • Controller revenue reached 17 percent year-over-year growth in Q3 2017 due to strength in software-as-a-service (SaaS) revenue, which totaled $58 million in Q3 2017; 6.9 million APs are currently managed through SaaS
  • Cisco held first place for WLAN equipment revenue in Q3 2017, with 44 percent share; Hewlett Packard Enterprise (HPE) has become the solid number-two via the acquisition of Aruba Networks and is the only other vendor with double-digit market share  

Our analysis

The global enterprise wireless local area network (WLAN) equipment market cooled off a bit in Q3 2017 after very strong results the prior quarter. Revenue declined 3 percent sequentially to $1.5 billion in Q3 2017, and the year-over-year growth rate stood at 6 percent after two quarters of double-digit growth.

Demand for WLAN APs continues at a double-digit rate, but lower average selling prices (ASPs) contributed to the revenue decline. Still, 2017 is shaping up to be a positive year with revenue growth in the double digits. One of the bright spots is the success of SaaS for WLAN management and control, which converts one-time hardware sales to recurring revenue. On track to surpass $200 million this year, SaaS revenue is poised to triple through 2021 and will help to smooth demand fluctuations and provide vendors with a steady revenue stream.

802.11ac wave 2 APs continue to be adopted rapidly, surpassing 50 percent of AP revenue in Q3 2017, up from just 18 percent a year ago. The next technology transition, to 802.11ax, is on the horizon, and a flurry of product announcements and initial shipments are expected in 2018.

Enterprise Networks Intelligence Service

The IHS Markit Enterprise Networks Intelligence Service provides global, in-depth coverage of data and communication networks deployed by small and medium businesses, enterprises and government organizations.

The quarterly WLAN Equipment Market Tracker tracks enterprise WLAN infrastructure, including controllers and access points by type and technology. The report provides worldwide and regional market size, vendor market share, forecasts through 2021, analysis and trends.

 

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