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The enterprise market continued to be the hotbed market with
the public hotspot arena emerging as the promising segment to look out for in
the future. A significant trend in the year FY2004-05 was the traction in the
SOHO and home segments as the Indian market gradually got down to unwiring
itself.
Voice&Data, a publication from CyberMedia, estimates an
almost 60% growth in the Indian WLAN equipment market in FY 2004-05, as the size
of the market in value terms went up from Rs 51.5 crore in FY 2003-04 to Rs 82.5
crore in FY 2004-05. This was a far cry from the whopping 329% (approx.)growth
witnessed in FY 2003-04 over FY 2002-03. This was accounted for by the sharp
decline in prices along with the fact that the base size on which the growth has
been calculated itself was much larger (Rs 51.5 crore) than the year FY 2002-03
when it was Rs 12 crore. This is an expected growth curve as the market size
grows and moves towards greater maturity.
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The Indian WLAN market grew by 60% to touch Rs 83 crore
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De-licensing of the use of low-power wireless equipment in the frequency band
2.4 to 2.4835 GHz for outdoor use, and in the 5.15-5.35 GHz and 5.725-5.875 GHz
frequency bands for indoor use
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Source: DQ Top20, 2005
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Leading the Wi-Fi adoption charge were the large Indian
enterprises. After warming up to Wi-Fi adoption in FY 2003-04, the wireless
penetration among the large enterprises reached a decent 46% last year, as per
the DQ-IDC Megaspenders 2005 survey. The survey indicated that almost 46% of the
sample organizations (all companies in the smaple are large organizations) have
deployed some form of Wi-Fi/WLAN in their organizations, up from around 26%
penetration in FY 2003-04. Manufacturing emerged as one of the key verticals
driving the Wi-Fi penetration. While the large enterprises led the wireless
charge, the SMEs and the SOHO/Home market also warmed up to Wi-Fi adoption last
year.
Majors in the Game
Enterprise Rules: The enterprise market segment continued to be major Wi-Fi
adopter with the large enterprises at the forefront followed by the SMEs. With
increased awareness relating to the technology as well as lesser apprehensions
with respect to security of the wireless networks, enterprises gained confidence
in implementing WLANs. The Wi-Fi networks continued to be complimentary to the
wired networks within most of the organizations, though a few of them
experimented with the wireless networks alone in their new office locations.
A significant trend during FY 2004-05, in terms of market
segments, was the emergence of the consumer segment. Eventhough the volumes
therein were small, wireless started gradually percolating down to the SOHOs/Homes
with technology becoming more affordable. These two segments are likely to
emerge as significant buyers of wireless equipment in the coming years. As a
result, there is going to be increasing traction by the vendors towards this
potential market in the future. Already the market is flooded with numerous
wireless products, with some at the lower end of the spectrum to meet the less
complex demands of the consumer market. In India, large enterprises currently
constitute bulk of the WLAN market-but elsewhere, around the world, the SME,
SOHO and Homes dominate the pie. India too would move towards a similar break-up
soon, with WLAN becoming more affordable and laptop penetration rising.
While SOHOs and Homes will emerge as a big chunk of the
market in the next few years, this segment will increasingly be highly sensitive
to price, support and ease of use factors. This will have a bearing on the
overall pricing and functionality trends in the wireless space.
In terms of verticals, the key implementer of wireless
technology was the hospitality industry with Wi-Fi also gaining popularity in
educational institutions. The other key adopters were manufacturing, IT and
Telecom, multi dwelling units.
Hot Spots Gaining traction: An area that was looked
upon with interest last year was the hotspots, both public and private. This
segment of the market has started gaining traction with telecom operators and
ISPs showing interest in this. Players like Bharti, Tata Telservices, Dishnet,
Sify, MTNL and BSNL started showing active interest and participation during FY
2004-05, which was much higher than the interest evinced during FY 2003-04.
There are around 500 hotspots estimated to have been operational by 31st March,
2005, out of which around 250-300 are estimated to be public hotspots. The
hotspot uptake gained prominence particularly in hotels, cafes like Barista, and
airports. While most of the 5 Star hotels already boast of being hotspots, a
marked trend during the year was the emergence of hotspots in the 3 and 4 Star
hotels as well. There were also a number of private hotspots deployed in
educational institutes and MNCs.
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Growth Drivers in FY 2004-05
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Falling Prices
The availability of WLAN products at attractive prices coupled with the fall
in the prices of laptops and internet bandwidth helped in bringing down the
costs drastically, giving the Wi-Fi market the perfect boost.
According to Voice&Data estimates, on the wireless equipment front there
was a price drop from Rs 8,000 as of March 2004 to Rs 2,500 as of March 2005,
for access points; and a drop from
Rs 1,500 to Rs 900 during the same period for PCMCIA. Thereby continuing the
price fall trend of the past year. Fall in chip prices was one of the basic
reasons for the fall in WLAN prices. Comparing to the price point prevalent in
March 2003: While the access point cost around Rs 20,000 the price of PCMCIA was
around Rs 4,000. This means that the access point and PCMCIA prices underwent a
drastic drop during a two-year period. These prices reflect the lower end of the
market, the actual street price may vary. Voice&Data estimates the overall
per user cost of deploying WLAN in the enterprise to have dropped by around 50%
in FY 2004-'05 over its previous year. This was a significant enough drop to
help make the technology affordable to a much wider spectrum. While the price
drop accelerated the adoption among the large enterprises and SMEs, it also
brought the SOHO/Home segment into the ambit of wireless adoption.
Great Regulations
The de-licensing of the 2.4 GHz band (the frequency band which is used for
broadband access on mobile phones and for Wi-Fi services) for indoor use of low
power applications and technologies had a positive impact on the wireless uptake
in FY 2004-'05. The year also saw some positive developments on the regulatory
front. In January 2005, the government also de-licensed the use of low-power
wireless equipment in the frequency band 2.4 to 2.4835 GHz outdoor use. As a
result, one will now be able to access high-speed internet on his/her laptop
even while on the move.
The government also de-licensed the indoor use of low power wireless systems
in the 5.15-5.35 GHz and 5.725-5.875 GHz frequency bands. The indoor usage
includes housing societies, recognized organizations, institutions, etc. This
will help consumers staying in a housing complex access broadband Internet
services on a wireless technology instead of dial-up. It will also allow the
ISPs to reach the consumers directly through Wi-Fi. While some signs of the
positive impact of these developments were visible during FY 2004-'05, it was
too short a period to gauge their full effect. The impact of these developments,
in terms of driving Wi-Fi penetration and accelerating the pace of Hotspots
growth, will become more pronounced over the year FY 2005-'06.
Other Drivers
Some of the other factors aiding wireless adoption in 2004-2005 were the
increased penetration of laptops as well as the emerging popularity of
alternative access devices like Wi-Fi-enabled PDAs and phones.
The constantly falling prices of laptops also made it more affordable, with
laptops now being perceived more as a necessity than just a gizmo. And notebooks
being shipped are also Wi-Fi enabled, providing complete mobility to users. The
growth in the Indian laptop market was more than 140% in the FY 2004-05 and the
good growth is expected to continue for the next few years. In addition to this,
the fact that a significant percentage of the laptops were Centrino enabled
contributed to Wi-Fi's prospects in the market. While there has been continued
growth in laptop penetration, the market still has a long way to go. Last year
saw an approx. 3-4% penetration of laptops (for every new computing client sold)
as compared to around 20% in APAC and almost 25% worldwide.
The laptop growth was complemented by the increased availability of Wi-Fi
enabled gadgets like PDAs and mobile phones, which are fast gaining acceptance
especially with the younger generation, adding to increased adoption of WLAN.
"These products are fueling the craze called 'freedom computing'. We
will see more of such products introduced in the market as more and more people
want the convenience of mobility."
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Pronto Networks emerged as a significant solution provider to
hotspots. Its major customers and projects in India in FY 2004-05 were Dishnet
Wireless (India), Convergent Communications and Bharti Infotel. Currently, in
India, Pronto is directly managing (MSP customers) over 30 hotspots through
Convergent Communications and over 200 hotspot locations through its tie-up with
Dishnet Wireless. D-link too has supplied to quite a few hotspots for Sify.
The hotspots are gaining a strong foothold among Indian users
and the number of hotspots in the country is expected to double in FY 2005-06.
Players like Dishnet and Sify are quite bullish about public hotspot. Service
providers are also increasingly selling hotspot access services as bundled
features to go with other broadband services. There will be increased usage of
hotspots, especially with devices like notebooks, PDAs, MP3s, being Wi-Fi
enabled, coupled with factors like decreasing costs and more hotspot locations
emerging. There are a lot of retail outlets that are getting into the Wi-Fi
fold. The trend of utilizing hotspots for professional requirements will change
towards a combination of business and personal services like downloading
music/video clips, online gaming, VoIP.
A Shift in the Pattern
Last year also saw some shift in the pattern of wireless usage. Some of the
enterprises started using it for applications beyond internet access and email
as they moved towards greater maturity. However, almost 90% of the applications
on wireless still continued to be data applications like email and internet-the
movement towards the other applications will be gradual.
These include voice applications like VoIP over WLAN. Some of
the organizations have also started using Wi-Fi connections for order
processing, updated inventory information requirements, remote monitoring using
wireless internet cameras, etc. On the consumer front, applications like video
streaming, online gaming, MP3 downloads are some of the new emerging
applications. Wireless has good speed and throughput. It can support upto 11
Mbps on 802.11b and upto 50 Mbps on 802.11g. Thereby making it possible for the
technology to deliver these emerging applications.
Many of the service providers are also now looking at
providing these emerging applications as a way to garner extra revenues. The
push from the service providers will further drive the market for new
applications on wireless in the future.
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802.11b vs 802.11g
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Besides 802.11b and g, there is no other WLAN technology that gained foothold
in India. Even amongst the two technologies the former continued to be more
widely deployed as is the case globally. The reason being that 802.11b products
are easily available in the market due to their stability & price factor and
also as it was the first commercially adopted standard developed by IEEE for
WLANs.
On the other hand, 802.11g is in a nascent stage as the products have just
entered the Indian market and it will some time for the technology to evolve to
a maturity level warranting wider adoption. However, 802.11g will gradually gain
popularity considering its ability to supply five times more throughput than
802.11b. It is expected that these standards will co-exist as the products
entering the market are both 802.11b and 802.11g compatible.
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Tech Trends to Watch
Future WLAN technologies will see standards which boost speed-802.11n
(which gives actual throughput of 108 Mbps) and standards that enhance security
like 802.11e and 802.11r. However, 802.11n, which is expected to double the 54
Mbps data rate supported by 802.11g or 802.11a, will not be finalized until next
year. Another key development on the wireless front is Wi-Max-broadband
Wireless access technology. Wi-Fi and WiMAX will co-exist in the future and
together give the length and breadth for this technology, and compete with
GSM and other technologies.
Final Word
In India, wireless is leapfrogging landline technologies and after the
bandwidth costs decrease considerably, there will be a greater penetration of
WLAN with the market continuing its growth trajectory in FY 2005-'06. On the
other hand, greater maturity and enhancements in the areas of security, speed
and functionalities like network management features will continue to aid
wireless adoption. As both the enterprise and the hotspot segments continue to
fuel the growth, the SOHO/Home segment will emerge as the new growth area in the
Indian market this year. But this segment will increasingly be highly sensitive
to price, support and ease of use factors, thereby fuelling innovations and
enhancements, even at the lower end of the product spectrum. Corporates, on the
other hand, are beginning to look at Voice + Data+ Video for wireless.
Hence, they're going to demanding better Quality of Service from service
providers.
Shipra Arora
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