Bottom drops out of consumer Wi-Fi market

Although shipments of wireless Lan equipment for homes and small businesses have increased strongly since the first 802.11b-compliant consumer Wi-Fi kit arrived in 2000, prices have plummeted.

According to market research firm In-Stat, this "price erosion" over the intervening years means that very few vendors are making much money in this segment at present.

However, the analyst firm still estimates that the small office/home office access point market will rise from approximately 17.6 million units in 2004 to roughly 32.6 million units in 2009.

In-Stat said that a major driver in this market is the transition from the 802.11g standard to products based on the emerging Mimo (multiple input, multiple output) antenna technology for wireless communications.

"In-Stat believes that there will be a gradually shrinking price premium for Mimo/802.11n," said In-Stat analyst Sam Lucero.

"The benefits of dramatically increased range appear to be resonating with consumers, more so than the increased throughput offered, and we believe customers are willing to pay extra for whole-home coverage."

In-Stat predicts that 802.11g will continue to dominate in the short term, but expects Mimo/802.11n to become the next "universal" standard.

The firm noted that shipment volumes for Mimo-based equipment were small in 2004, but that at least five vendors have introduced products, with more expected in 2005.