Vendors depleted their backlogs of Wireless LAN (WLAN) orders faster than expected, bringing worldwide revenues down 4 percent year-over-year (Y/Y) in 3Q 2023, according to a new report from Dell’Oro Group. Following an unprecedented stretch of revenue expansion, vendors are now reporting flat or declining orders from enterprises, and the slowdown is expected to last for several more quarters.
“3Q 2023 was an inflection point in the WLAN market. A large variability in vendor revenues summed to a slight market contraction,” said Siân Morgan, Research Director at Dell’Oro Group. “Cisco eked out a 3 percent Y/Y gain on a calendar quarter basis, with license revenues supporting the expansion despite a decline in the number of units shipped.
“The next few quarters are expected to be a challenge for WLAN vendors. Enterprises and system integrators must take the time to deploy the equipment they received before embarking on new projects. In addition, the return to demand-driven conditions is expected to put downward pressure on unit prices. Only a select few vendors can grow WLAN revenues in these market conditions,” continued Morgan.
Additional highlights from the 3Q 2023 Wireless LAN Quarterly Report:
- Y/Y revenue growth varied widely from vendor to vendor, ranging from under -50 to over +50 percent.
- Price growth helped soften the decline in unit shipments, but prices for the different Wi-Fi technologies are shifting.
- More vendors recognized Wi-Fi 7 revenues, but enterprise class Wi-Fi 7 sales will not become significant until 2024.
- Meanwhile, Wi-Fi 6E adoption continued to climb slowly in 3Q 2023, to just over 10 percent of units shipped. Not all verticals declined with the market. For instance, WLAN sales to the Healthcare vertical grew Y/Y in 3Q 2023.
- WLAN sales to the major regions were flat or down, while the smaller regions grew Y/Y.
- Revenues from Public Cloud-Managed WLAN contracted Y/Y for the first time in history, although they still outperformed Premises+Private
- Cloud-Managed WLAN on a Y/Y basis.
Party is Over for WLAN Market as Revenues Contract in 3Q 2023, According to Dell’Oro Group