WLAN Switch Shakeout Looms?

Only one or two of the herd of wireless LAN switch startups that are currently emerging from stealth mode will survive to become viable independent businesses. That's the stark assessment of analysts and industry watchers following this space.

Usually, startups get to bask in the unrealistic hype that accompanies any new networking equipment category for at least a year or two, before being slapped down like a red-headed stepchild by the inevitable backlash and predictions of a dreaded shakeout. But as Unstrung has previously reported, the 802.11 LAN switch market appears to be moving at accelerated speed… hence the early predictions of doom.

Startups like Aruba Networks Inc., Trapeze Networks Inc., Vivato Inc., and many others face three major problems as they plot their entry into this nascent market, observers say:

• Problem #1: Fierce [grrrrrrr!] competition from incumbent wired LAN switch vendors as they add wireless capabilities to their current enterprise switches

• Problem #2: Differentiating products against competitors' offerings will be challenging in an over-crowded market

• Problem #3: The addressable market for sales of fancy schmancy 802.11 smart hubs and switches isn’t big enough to support four or five incumbents and eight -- or more -- startups.

Cisco Systems Inc. (Nasdaq: CSCO), Extreme Networks Inc. (Nasdaq: EXTR), Hewlett-Packard Co. (NYSE: HPQ), and 3Com Corp. (Nasdaq: COMS) are some of the "usual suspects" that Chris Kozup, senior research analyst for global networking strategies at the Meta Group Inc., expects to see moving into the wireless end of the market.

"It’s a safe bet that the major Ethernet switch vendors will extend their products to encompass wireless LAN," Kozup says. "Especially as startups like Aruba and Trapeze have the potential to make a lot of noise in the press and eat into their market."

The major vendors certainly aren't sitting on their hands waiting for this to happen. Brice Clark, worldwide director of strategy and business planning for Hewlett Packard's ProCurve networking business, told Unstrung that HP is definitely looking to offer a wireless LAN switch as part of its product portfolio.

Cisco is rumored to be working on an initial product now and has also made an investment in Bandspeed Inc., a startup working on smart antenna wireless LAN switching technology (see Cisco’s LAN Switch: Build or Buy? and Startups Add to Switch Mix for more details).

Extreme and Nortel have not announced any plans for wireless LAN switch products yet, and neither company could find anyone that could speak to us about this topic by press time.

"Its going to be a pretty tough market for the startups, especially competing against the mainstream vendors," muses Kozup. He reckons there are already too many new companies working in this "over funded" space. "But it is too early to say who will survive," he adds, helpfully.

Part of the problem with picking winners and loooooosers is that there is scant information on differentiating features of the products that startups are working on. Management, security, performance, and price are the obvious suspects. But startups like Trapeze, which is noodling with some subscriber management capabilities it developed via its ex-Redback engineers, could just surprise the others by coming out with something new.

The only absolute distinction that can be drawn at the moment is that there are companies working on two very distinct types of technology that are both being marketed under the generic heading of a "wireless LAN switch.”

Firms like Aruba, AirFlow Networks, and Trapeze are actually going to deliver products that could be defined as shared media hubs (see Aruba's Switch Pitch, AirFlow's WLAN Switch Packs a Big MAC and Trapeze's Wireless Bait & Switch). Firms like Vivato and Bandspeed have products that actually switch wireless capacity between users (see {27661} and Switch Tiff Heats Up for a full rundown on the arguments on what actually constitutes a WLAN switch).

Whatever happens, Doug Klein, CTO of WLAN management software vendor Vernier Networks Inc., thinks that the startups will be fighting for market share in a market that isn't fully grown yet. "How many companies are going to be implementing the kind of large networks of access points that these products are built for?" he wonders. "If I was them, I'd be all over the conference centers and the airports instead."

— Dan Jones, Senior Editor, Unstrung