The last six months have seen the barriers to wireless adoption erode and business opportunity arrive as promised. But with any large uptake of technology comes the fear of commoditisation — and the real challenge for the reseller becomes how to differentiate yourself from the guy down the street.
While 2001 and 2002 disappointed, this year has been a boomer for wireless. In the most recent second quarter, shipments of Wi-Fi gear grew about 69 per cent on the same quarter last year according to research by the Dell’Oro Group.
Wi-fi equipment vendor, NetGear, claims its Australian business has trebled in the last 12 months, and local wireless distribution outfit Integrity Data Systems is also talking about more than 100 per cent.
There are several reasons cited for such growth. The first is that the technology has matured while prices have dropped to a point that meets the needs of SOHO and home users.
Technology speaking, the first few standards the industry grappled with were not met with a great deal of enthusiasm by the end-user community.
The 802.11b standard, running on the 2.4(GHz) frequency, had solid growth but is relatively slow at 11Mbs. The 802.11a standard improved performance at 54Mbs, but users found the 5GHz frequency riddled with interference and range complications. The latest standard to be ratified, 802.11g, has the best of both worlds running at 54Mbs on the 2.4 ghz frequency.
“It took a long time for the G standard to be ratified,” technology product manager for ASX-listed wireless vendor NetComm, Andrew Trickett, said. “A lot of people were holding out for it.”
Users have voted with their feet. The Dell’Oro research shows that sales for the 802.11g standard grew at about 48 per cent, last quarter.
Another factor aiding the growth of Wi-Fi in the consumer and small business market was the uptake of broadband. The two technologies have become intimately coupled in the home market, and have presented great opportunities to the retail channel in particular.
“My viewpoint is that in the home market, wireless was never going to go anywhere until broadband went somewhere,” managing director for NetGear Australia, Ian McLean, said. “It’s only when you get broadband that a home wireless network becomes practical. It was supposed to be the year for wireless uptake in 2001 and 2002, but it never happened because there was no need for home networking.
This year, while our broadband uptake here is still nowhere near the levels it is at overseas, there has been some more focus in that area and that has spurred on the uptake of wireless.”
A senior product manager at Belkin Australia, Brendan Grant, said the uptake of broadband made home networking much more attractive to users — and with telecommunications giants such as Telstra investing in the marketing of broadband, new opportunities have opened up to bundle access points and wireless cards with such connections.
Grant claimed that the channel was achieving wireless attach rates of 30 to 40 per cent with every broadband connection sold.
NetGear’s McLean agrees — but was not sure the IT channel has capitalised on the opportunity.
“There is a lack of understanding in both the corporate and consumer channels about just how vast the opportunity is for bundling broadband and wireless technology,” he said.
Breaking down the barriers
While performance, price and broadband uptake have helped wireless technology thrive in the consumer sector, the corporate world has had other issues to worry about. The much publicised security holes in corporate wireless LANs have had a severe effect on the market.
Tricket said there was more hype surrounding the security issue than necessary. While the industry’s first attempt at wireless security (WEP or Wired Equivalent Privacy) was certainly crackable, its 128-bit encryption meant that your average hacker would have to collect about 3GB of data to successfully get in — a highly unlikely scenario for the average SOHO or home user to worry about.
While the industry waits for the finalisation of the 802.11i protocol, it has had the safety net of a temporary standard called WPA or Wi-Fi Protected Access — which included advanced authentication technology on its predecessor and a similar number of features to what 802.11i would provide, Trickett said.
“There is always security risk — the real issue is the education process, whether the reseller is educating customers about managing that risk,” managing director of Belkin Australia and New Zealand, Mike Bell, said. “With encryption and address filtering, the tools to secure wireless are in place.”
Even with the security issue being better understood, the corporate market presents both a large challenge and opportunity for the IT channel.
“Security is not the barrier anymore — it is now whether corporates can find a business model for the wireless technology,” Cisco Australia branch manager, Tim Hemingway, said.
McLean said that many resellers had hesitated on the technology, voicing concerns over speed/performance and security.
“It’s also a lot more complicated than traditional networking — laying down a network between point A and point B with X amount of throughput — now they have to think about positioning, interference, networking from building to building, and a whole lot of variables they previously didn’t need to consider,” he said.
According to Ross Chiswell of wireless distributor, Integrity Data Systems, those resellers that have been in the business for a while have seen prices and subsequently margins fall to such low levels that a reseller needs to sell four times the volume just to remain profitable.
This commoditisation of wireless products means that the IT channel will have missed its opportunity if it only moves boxes.
Too much emphasis, Chiswell suggests, has been placed on those wireless connectivity products whose sole purpose is to replace wires.
“They have less features and less sales opportunities because they are dominated by cheap brands with poor margin,” he said.
Instead, Chiswell suggests, resellers should be eyeing the business market — potential customers that had held off the technology due to security issues, but are returning to the subject with the attractive price/performance of the 802.11g standard.
To win these customers would take a more educated and sophisticated approach, he said.
“No one clearly understands the fact that not all access points are the same,” he said. “For one, they work on different standards. Two, there are different access points for different needs. The ability of an access point to handle bandwidth decreases the more users are on it. Its ability to handle that load depends on factors like what kind of processor is in it, how much RAM and how much flash memory. Sometimes people only realise afterward that while they might have got rid of their wires, the network can’t support the load they expected from it.”
Chiswell said this ignorance was akin to buying a notebook based on the size of its screen rather than the performance of its components.
“The channel is not doing its job,” he said. “You have to ask the customer what they are doing this for, and talk them out of buying products that won’t have the grunt to do the job. This is why the value is coming out of the channel. Too many are just flogging the cheap stuff.”
Director of Ethernet switching at networking vendor Nortel Australia, Jason Moore, said that it was not just security concerns holding back the corporate market from tackling wireless adoption.
He said that vendors and their channel partners were only just starting to learn how to quantify the return on investment for the technology when selling to customers.
“If resellers walk in trying to sell access points and cards, they are wasting their time,” he said. “Pretty soon every laptop released to market will come with wireless built in anyway. They really need to be positioning themselves as wireless LAN implementation specialists. They should be doing a study of the businesses requirements, of where wireless should be used, of the risks involved and of the design and implementation.”
Moore said enterprise wireless roll-outs required a lot of time and expertise — and often began with coverage plans and site surveys before technology choices were even considered.
“You even need to take into consideration things like the attenuation of walls,” he said. “It is these aspects — and security aspects that will give you the chance to add the most value. Once you start talking with an organisation about their security policy, about what authentication systems they use — it opens doors for all kinds of solutions. Access points and wireless cards should be the smallest part of it.”
Next wave of opportunity
Chiswell recommends that resellers begin pitching more value-added products alongside the hardware fit-out for a wireless network.
“The corporate marketplace is starting to understand the security issue, but equally as important they are starting to look at things like management and control,” he said.
There were several new software packages in the market that could manage user profiles, access control and bandwidth use, Chiswell said.
A reseller can use the sale of this software to show organisations how wireless connectivity can actually increase employee activity rather than threaten it.
Chiswell said many IT managers feared that uncontrolled wireless access could see low-level users downloading “the latest Britney Spears video” while high-end users could not access the necessary bandwidth for their core business function.
“The channel has far more opportunity to go back to corporate clients and talk to them about controlling the network,” he said. “The next wave of opportunity is not just security but also management. Consulting will get you out of the box moving and enable you to find out more about the organisations’ needs.”
McLean is confident that now that standards are maturing and security holes are being addressed, resellers and end users will thrive on the opportunity wireless technology provides.
“The technology is better understood now,” he said. “It is not a replacement for a wired network but rather an overlay technology. It’s not for everybody — but certain parts of the organisation could see massive productivity gains by adopting it.”