Cost has long been the obstacle to implementing wireless networks in business environments. But with prices set to plunge, all of that may be about to change.
September 1, 2001
Surprisingly, it is not the tiresome complexities of standardization, nor the intricacies of interoperability, nor even the suspicions of scanty security that are keeping wireless networking solutions from mobile tech-hungry users. The culprit to most delays in wireless deployment is still cost.
Awareness remains a major issue for the consumer, however the more practical enterprise-buyer is still weighing the dollars spent on wireless against those spent on conventional wired networks. While wireline solutions have long been less expensive and offer significantly higher throughputs, the advantages of wireline are diminishing.
WLAN ENTERING MAINSTREAM
Wireless solutions success in vertical markets such as health care and logistics have propelled wireless local-area-network (WLAN) products into the mainstream. Many vendors offer solutions specifically designed for these ‘verticals’. The successful experiences with WLANs in these market segments have caused the word to spread into other sectors: wireless is poised to take-off.
Technologies such as Bluetooth and 802.11 will enable these early adopters to keep better track of assets, as well as increase employee productivity. Approximately one-third of corporations in North America have expressed interest in deploying WLANs. Technology consulting firm the Yankee Group expects this interest to quickly translate into adoption.
The market potential for WLAN products has drawn the attention of many equipment manufactures (such as Nortel, 3Com and Avaya) and service providers (i.e., Rogers, Telus and Bell Canada) which are offering an abundance of products. As a result of the increasing competition and product choice, the WLAN market has been subject to rapid and significant price drops. Today, the price of a PC card ranges between $150 and $350 and an access point costs between $415 and $2,250.
COMPARING APPLES TO ORANGES
Despite this reduction in cost, IT departments and consumers are still comparing prices of WLANs to wired networks. Larger enterprises, which require a significant amount of investment in deploying IT systems, are the most sensitive to the price issue. The major cost discrepancy is acting as an inhibitor to the growth of WLANs in these enterprises. Outfitting employees with PC cards and ensuring enough access points can quickly add up the total capital investment in networking solutions.
In smaller enterprises, wireless deployment is occurring more rapidly. But, until the cost of these products is reduced, and until the value they offer to the enterprise can convince sceptical finance departments, growth among large enterprises will be slow in reaching its true potential.
PRICES TO COME DOWN
Good news (for the customer) is not far off — over the next year prices are expected to continue to decline by another 15 to 20 per cent. Until that time, and for the next few years, smaller companies are likely to represent the fastest growing segment of the WLAN market. These businesses can deploy wireless technologies much more easily with out-of-the-box products.
The advantages of WLANs are plenty and there is little doubt that those advantages will continue to drive deployment. As costs continue to decline, it is expected that wireless devices will be added to existing wireline infrastructures to enhance flexibility in larger enterprises. CS
Iain Grant is Managing Director of the Yankee Group in Canada, a technology-consulting firm in Brockville, ON. An economist by training, Mr. Grant has more than 20 years of diversified experience in the management, development and utilization of information and communication technologies.