Prediction: Global enterprise-level WLAN equipment spending will reach $40 billion in the next five years

Market research firm Dell'Oro Group has just updated its five-year forecast report for the global WLAN market. Tam Dell'Oro, founder and CEO of Dell'Oro Group and leading WLAN market analyst, introduced the key information of this report in a blog post.

He said Dell'Oro Group raised its forecast and restored its pre-pandemic outlook that global spending on enterprise-class WLAN equipment will approach $40 billion over the next five years, resulting in a high single-digit percentage annual compound growth rate.

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The following is the main content of this blog:

Tsunami of spending floods education and government verticals

Governments around the world are investing heavily in advancing network technology in their education systems and improving network access for citizens. Enterprise WLAN equipment is where it all comes in. Manufacturers are in the right place at the right time, especially those with established relationships in the education and government verticals.

Enterprise WLAN equipment has been growing at a rapid pace over the past three quarters. All industry participants we have interviewed, from system manufacturers, component manufacturers to network integrators, say that supply is outstripping demand. Fiscal stimulus policies from many governments have boosted demand, which we estimate to be around $1 billion. We believe some large enterprises have seen some spending, but we have yet to see a recovery in spending from private companies of all sizes and across all verticals.

We are modeling a phenomenon where government spending will be significantly reduced next year, however, we wonder if we are entering an Eisenhower-style era of technology infrastructure build-up that could last for 10 years. If existing projects are successful, more related programs may emerge, and more countries may also launch programs, not wanting to be left behind. We are watching for announcements from governments about technology or digitalization programs.

We had predicted a sales surge in 2022 with the arrival of Wi-Fi 6E products, but users are not waiting, they are starting to consume now. We understand that many government-funded projects have deadlines, so users are starting to deploy available products now. Therefore, this surge appears to be happening in 2021, not 2022.

Wi-Fi 6E and Wi-Fi 7 low-end access points are becoming more popular

We predict faster penetration of Wi-Fi 6E and Wi-Fi 7 because we expect low-end products to enter the market earlier than high-end products. This is a change because previous technology transitions were led by high-end products rather than low-end products. Low-end products dominate market shipments, which may lead to faster return on investment for semiconductor and system manufacturers. In addition, even with low-end access points, performance will be improved on the 6GHz band, which may satisfy most users.

Cloud-managed and on-premises managed web applications will see sales growth

Sales of WLAN network management equipment (aka controllers) and specialized applications (like troubleshooting and location/tracking) have remained roughly at the same level over the past decade, while overall WLAN market sales have roughly doubled and access point unit sales have increased about fourfold. Manufacturers have been developing new features and selling them separately from the management hardware as subscription licenses. This has been intense competition, providing manufacturers with a way to differentiate and quickly bring new features to market. As with many competitive markets, we have recently seen licensing prices fall, which has led to a flurry of activity that suggests 2021 will be a year of change. We are optimistic that manufacturers will see higher revenues as they develop applications that reduce customer pain points.